Decision on Amending the Measures for the Administration of
Securities Offering and Underwriting
1. Paragraph 2 of Article 2 is amended to read: “In the issuance of securities, issuers,
securities companies and investors shall also comply with other securities issuance
provisions of the China Securities Regulatory Commission (“CSRC”), the business rules
of stock exchanges and securities depository and clearing institutions, and the
self-disciplinary rules of the Securities Association of China. In underwriting securities,
securities companies shall also comply with the relevant CSRC provisions regarding
sponsorship, risk control and internal controls.”
2. Article 5 is amended to read: “In an initial public offering of shares, the issue price of
shares may be determined in the manner of price inquiry to inquiry participants or any
other legal and feasible manner such as direct determination of price through negotiation
between the issuer and the managing underwriter, but the issuer shall specify the manner
of pricing for the current share issue in the share issuance announcement. The securities
issued by a listed company shall be priced in accordance with the relevant CSRC
provisions regarding the issuance of securities by listed companies.
“Inquiry participants are securities investment fund management companies, securities
companies, trust and investment companies, finance companies, insurance institution
investors, qualified foreign institutional investors, and institutional and individual investors
independently recommended by the managing underwriter, which meet the conditions
prescribed in these Measures, and other investors recognized by the CSRC.
“To independently recommend inquiry participants, a managing underwriter shall,
according to the provisions of these Measures and the self-disciplinary rules of the
Securities Association of China, develop clear recommendation principles and criteria,
establish a transparent recommendation decision-making mechanism, and file them with
the Securities Association of China. Independently recommended inquiry participants
include institutional investors that have relatively strong pricing abilities and long-term
investment intentions and individual investors that have relatively abundant investment
experience.”
3. Article 7 is amended to read: “As an inquiry participant, an institutional investor shall
meet all of the following conditions:
(1) It is legally established and has not received any administrative punishment or
regulatory measure from a relevant regulatory department or any criminal punishment for
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any gross violation of laws and regulations in the last 12 months.
(2) It is legally qualified to make stock investments.
(3) It has a good credit history and has the institutions and personnel necessary for
independent engagement in securities investment.
(4) It has a sound internal risk evaluation and control system which is able to operate
effectively, and its risk control indicators are in compliance with the relevant provisions.
(5) It has been 12 months since it was removed from the list of inquiry participants by the
Securities Association of China under these Measures.
“As an inquiry participant, an individual investor shall have five or more years of
investment experience, relatively strong analysis abilities, and relatively strong risk
tolerance. A managing underwriter shall strictly adhere to the predetermined
recommendation principles, criteria and procedures.”
4. Article 9 is amended to read: “A managing underwriter may provide an investment value
study report to inquiry participants after the preliminary prospectus is published. No issuer,
managing underwriter or inquiry participant may disclose in any form to the public any
content of the investment value study report, except as otherwise prescribed by the
CSRC.”
5. Article 13 is amended to read: “After the prior disclosure of the (draft) prospectus, the
issuer and the managing underwriter may preliminarily communicate with specific inquiry
participants in a non-public form to solicit their price intentions and estimate the issue
price range and may also estimate the issue price range in other reasonable manners.
“Preliminary communications may not be publicly conducted, directly or indirectly, and
inquiry participants may not be provided with any issuer information other than the open
information such as the information in the (draft) prospectus disclosed in advance.”
6. Article 14 is amended to read: “Where price is determined in the manner of price inquiry,
the issuer and the managing underwriter may directly determine the issue price according
to the preliminary inquiry results or determine an issue price range through preliminary
inquiry and then determine the issue price within the range through accumulated bidding
inquiry.”
7. One article is added as Article 15: “After the preliminary prospectus of an initial public
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offering is published, the issuer and its managing underwriter may conduct promotion and
price inquiry to inquiry participants and conduct promotion to public investors on the
Internet and in other manners.
“When the issuer and its managing underwriter conduct promotion to public investors, the
issuer information provided to public investors shall be consistent with the information
provided to inquiry participants in terms of content and integrity.”
8. One article is added as Article 16: “During the course of promotion, the issuer and its
managing underwriter shall not induce or mislead investors by improper means, such as
exaggerated publicity or false advertisement, shall not interfere with the normal quotation
and subscriptions from inquiry participants, and shall not disclose any issuer information
other than the open information such as the information disclosed in the preliminary
prospectus. Promotional information shall not contain any false records, misleading
statements or major omissions.
“Underwriters shall retain materials regarding the processes of promotion, price inquiry
and pricing and archive the same for future reference, including but not limited to
materials for promotional purposes and live recordings of road shows, so as to truthfully
and comprehensively reflect the price inquiry and pricing processes.”
9. Article 15 is renumbered as Article 17 and amended to read: “Where the issue price is
determined in the manner of price inquiry, an inquiry participant may, at its sole discretion,
decide whether to participate in the initial inquiry and, without justifiable reasons, the
managing underwriter may not refuse an inquiry participant's application to participate in
the initial inquiry. Inquiry participants that have not participated in the initial inquiry or have
participated in the initial inquiry but have not submitted a valid quotation may not
participate in the accumulated bidding inquiry and offline placement.”
10. Article 17 is renumbered as Article 19 and amended to read: “The managing
underwriter's proprietary securities account may not participate in the price inquiry, offline
placement and online issuance in the current share issue.
“The proprietary account of an inquiry participant that has an actual control relationship
with the issuer or its managing underwriter may not participate in the price inquiry and
offline placement but may participate in the online issuance in the current share issue.”
11. Article 21 is deleted.
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12. One article is added as Article 22: “Where an issuer and its managing underwriter
determine the issue price by independent negotiations between them or in any other legal
and feasible manner other than price inquiry, they shall specify the pricing manner in the
issue plan and publish a preliminary prospectus after filing the issue plan with the CSRC.”
13. Article 24 is renumbered as Article 25 and amended to read: “An issuer and its
managing underwriter shall allot shares to inquiry participants that participate in offline
placement. As a general rule, the quantity of shares allotted by an issuer and its managing
underwriter to inquiry participants may not be lower than 50% of the total of new shares
issued and old shares transferred in the current public offering.
“Inquiry participants may independently agree with the issuer and underwriters on the
holding period of shares placed offline.”
14. Article 25 is renumbered as Article 26 and amended to read: “Placees are limited to
the following categories:
(1) Securities investment funds raised with approval.
(2) National Social Security Fund.
(3) Proprietary securities accounts of securities companies.
(4) Collective asset management plans of securities companies developed with approval.
(5) Proprietary securities accounts of trust and investment companies.
(6) Collective trust plans established by trust and investment companies that have
satisfied the reporting procedure with competent regulatory authorities.
(7) Proprietary securities accounts of finance companies.
(8) Approved securities investment accounts of insurance companies or insurance assets
management companies.
(9) Securities investment accounts managed by qualified foreign institutional investors.
(10) Enterprise annuity funds that have satisfied the filing procedure with competent
regulatory authorities.
(11) Securities investment accounts managed by institutional investors independently
recommended by the managing underwriter and securities investment accounts of
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individual investors independently recommended by the managing underwriter.
(12) Other securities investment products recognized by the CSRC.
“Where it is directly or indirectly stated in the prospectus, investment agreement or any
other similar document of a securities investment product managed by an institutional
investor that subscription to new shares is only for the purpose of gaining the price
difference between the primary and secondary markets, the relevant securities investment
account may not serve as a placee.”
15. Article 29 is renumbered as Article 30 and amended to read: “The managing
underwriter shall check on the registration and filing status of inquiry participants and
placees and shall not place shares to an inquiry participant that falls under any of the
following circumstances:
(1) The inquiry participant has not participated in the initial inquiry when price is
determined in the manner of price inquiry.
(2) The name and account information of the inquiry participant or placee are inconsistent
with those registered with the Securities Association of China.
(3) The inquiry participant has failed to submit a quotation within the prescribed time limit
or transfer in full the subscription capital.
(4) There is evidence that the inquiry participant has committed any violation of laws and
regulations or any violation of the principle of good faith during the inquiry process.”
16. Article 31 is renumbered as Article 32 and amended to read: “In the initial public
offering of shares, an issuer and its managing underwriter shall establish a claw-back
mechanism between offline placement and online issuance and adjust the proportion
between offline placement and online issuance according to the status of subscription.
“If online subscription is insufficient, shares may be clawed back for offline subscription by
investors, and, if subscription is still insufficient, other investors recommended by the
underwriting syndicate may participate in offline subscription.
“When the lot winning rate for offline subscription is two to four times that for online
subscription, the issuer and its underwriters shall claw 10% of the shares offered in the
current issue from offline subscription to online subscription; and if the lot winning rate for
offline subscription is more than four times that for online subscription, 20% of the shares
offered in the current issue shall be clawed from offline subscription to online
subscription.”
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17. Article 49 is renumbered as Article 50 and amended to read: “In the public offering of
securities, the managing underwriter shall, within 10 days after the securities enter public
trading, file a summary underwriting report with the CSRC, summarizing and explaining
the basic condition during the issuance period and the performance of the securities after
they enter public trading, and shall provide the following documents:
(1) A separate edition of the prospectus.
(2) The underwriting agreement and the underwriting syndicate agreement.
(3) A witness opinion of a lawyer.
(4) A capital verification report issued by an accounting firm.
(5) Other documents required by the CSRC.”
18. Article 52 is renumbered as Article 53 and amended to read: “During the period from
the acceptance of IPO application documents to the confirmation of the issuer's
application and the publication of a preliminary prospectus, none of the issuer and other
parties related to the current issue may conduct promotional activities related to the share
offering in public, directly or indirectly or conduct relevant activities through other
interested parties or by authorizing other persons to do so.
“The information disclosed by an issuer and its underwriters during the issuance process
shall be true, accurate and complete, without one-sided exaggeration of advantages,
understatement of risks and beautification of image to mislead investors, and without any
false records, misleading statements or major omissions.”
19. Article 56 is renumbered as Article 57 and amended as: “An issuer and its managing
underwriter shall announce the issue price, price-to-earning ratio, and computing method
for price-earning ratio. An issuer may also disclose at the same time the price-to-book
ratio and other issue price indicators reflecting the issuer's industry characteristics.”
20. Articles 60 and 61 are consolidated into Article 61 and amended to read: “Where any
issuer, securities company, securities service institution or inquiry participant, the directly
responsible person in charge thereof, or any other directly liable person thereof violates
any law, administrative regulation or these Measures, the CSRC may order such an entity
to make rectification and, against the directly responsible person in charge and other
directly liable persons, may take regulatory measures, such as holding regulatory talks,
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placing them under special supervision, issuing warning letters, ordering them to provide
a public explanation, identifying them as inappropriate persons for their positions or
banning them from market access, and record the same in their integrity files;
administrative punishments shall be imposed on them according to the relevant provisions
if required; and if any crime is involved, the case shall be transferred to the judicial
authority for criminal investigation. The Securities Association of China shall take
disciplinary actions against the relevant entities and individuals in accordance with its
self-disciplinary rules.”
21. Article 62 is amended to read: “Where a securities company commits any of the
following conduct, the security companies shall assume legal liability in accordance with
law, and the CSRC may order suspension of the securities company's securities
underwriting business for 36 months from the date of confirmation of the conduct:
(1) The securities company has underwritten any unapproved securities.
(2) During the underwriting process, the securities company has published any
advertisements or conducted other activities for promotional purposes that are false or
mislead investors, has induced by improper means others to submit quotations or
subscribe shares, or has disclosed information that contains any false records, misleading
statements or major omissions, and the circumstances are serious.
(3) The securities company has participated in offline price inquiry and placement with its
own funds directly or indirectly or has instigated others to submit high quotations and
restricted others from submitting low quotations, seriously interrupting the normal
quotation order.”
22. Article 63 is amended to read: “Where a securities company commits any of the
following conduct, the securities company shall assume legal liability in accordance with
law, and the CSRC may order suspension of the securities company's securities
underwriting business for three to 12 months from the date of confirmation of the conduct,
depending on the seriousness of the circumstances:
(1) The securities company has divulged in advance any information regarding an issue of
securities.
(2) The securities company has canvassed the underwriting business by means of unfair
competition.
(3) The securities company has provided inquiry participants with any issuer information
other than the open information such as the information disclosed in the prospectus (or
preliminary prospectus).
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(4) The securities company's actual operations during the underwriting process are
inconsistent with the issue plan filed with the CSRC.
(5) The securities company has written or published any investment value study report in
violation of the relevant provisions.
(6) The securities company has provided any financial aid or compensation to subscribing
investors directly or through interested parties in violation of the relevant provisions.
(7) The securities company has illegally conveyed interests to the recommended inquiry
participants.”
23. Article 64 is amended to read: “Where an issuer, the directly responsible person in
charge thereof or any other directly liable person thereof conducts any of the following
conduct, the issuer or person shall assume legal liability in accordance with law, and the
CSRC may order rectification and, against the directly responsible person in charge and
other directly liable persons, may take regulatory measures, such as holding regulatory
talks, placing them under special supervision, issuing warning letters, ordering them to
provide a public explanation, identifying them as inappropriate persons for their positions
or banning them from market access, depending on the seriousness of the circumstances,
and record the same in their integrity files:
(1) The issuer or person has provided inquiry participants with any issuer information
other than the open information such as the information disclosed in the prospectus (or
preliminary prospectus).
(2) The issuer or person has provided any financial aid or compensation to subscribing
investors directly or through interested parties in violation of the relevant provisions.
(3) Before the issuer's stock enters public trading, the issuer or person has published any
advertisements or conducted any other activities for promotional purposes that are false
or mislead investors, has induced by improper means others to submit quotations or
subscribe shares, or has disclosed any information that contains any false records,
misleading statements or major omissions, and the circumstances are serious.
(4) The issuer or person has instigated others to submit high quotations and restricted
others from submit low quotations, seriously interrupting the normal quotation order.”
24. Article 66 is deleted.
This Decision comes into force on May 18, 2012.
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The Measures for the Administration of Securities Offering and Underwriting, as amended
and adjusted in the numbering of clauses according to this Decision, shall be re-issued.
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