news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

A new rule breaks the tranquility of the weekend.

On August 16, the Ministry of Justice’s official website issued a notice: The Ministry of Justice, together with the Ministry of Finance and the China Securities Regulatory Commission, has drafted the "Regulations of the State Council on Regulating the Services Provided by Intermediary Institutions for Public Issuance of Stocks by Companies (Draft for Comments)" (hereinafter referred to as the "Regulations") and solicited public opinions.

Among them, the following are of particular concern: local people's governments at all levelsNo rewards may be given to issuers or intermediary institutions based on the results of public offering and listing of stocks.

In other words, theIPOThe enterprise reward and subsidy measures may soon become a thing of the past. At this point, local government subsidies have ushered in new changes.

Latest scene:

IPO subsidies will be phased out

This scene is coming.

According to the drafting instructions of the "Regulations of the State Council on Regulating the Services Provided by Intermediary Institutions for Public Issuance of Stocks by Companies (Draft for Comments)", the formulation of these "Regulations" is mainly to regulate the service behaviors related to public issuance of stocks, improve the quality of listed companies, protect the legitimate rights and interests of investors, and promote the healthy development of the capital market.

The Regulations have a total of 19 articles, covering several key aspects. Among them, the one that has attracted a lot of attention and discussion is that it clearly statesLocal governments are not allowed to provide incentives for companies to go public:

Article 10 Local people's governments at all levels shall not grant rewards to issuers or intermediary institutions based on the results of public issuance and listing of stocks.

If the local people's government violates Article 10 of these Regulations, there will be corresponding penalties:

Article 16 If a local people's government violates Article 10 of these Regulations and grants rewards to issuers or intermediary institutions, the rewards shall be recovered and the relevant authorities shall impose sanctions on the responsible leaders and directly responsible persons in accordance with the law.

This means that theSupport for corporate IPOs, whereby multiple departments provide incentive funds to encourage companies to go public, may become a thing of the past.

In addition, in view of the characteristics of the industry, the draft for comments puts forward specific regulatory requirements for different intermediary institutions, stipulates the basic principles for the practice and charging of intermediary institutions, and clarifies that the fees charged by service institutions shall not be linked to IPO results:

Article 6 When securities companies engage in underwriting business, they may charge service fees in stages according to the progress of the work, but whether to charge or how much to charge may not be conditional on the results of the public issuance and listing of stocks.

When securities companies engage in underwriting business, they must comply with the regulations of the state and industry regulatory authorities and charge service fees based on a comprehensive assessment of project costs and other factors.

Article 7 When performing auditing business, accounting firms may charge service fees in stages according to the progress of the work, but whether to charge or the amount of the fee shall not be made a condition based on the results of the public offering and listing of stocks.

According to the Ministry of Justice's official website, the draft for comments mainly follows the following ideas:

First, we should adhere to the problem-oriented approach, focus on regulating the relevant charging issues in the services provided by intermediary agencies, strengthen supervision, and enhance the independence of intermediary agencies.

Second, we will adhere to differentiated policies. Under the premise of unified standards, we will put forward specific regulatory requirements for different intermediaries in light of their industry characteristics.

Third, we will adhere to strict supervision, make up for the shortcomings of the system, and clarify the relevant prohibitive regulations and punishment measures for intermediaries, issuers, and local people's governments.

It is reported that the time for soliciting opinions is from August 16 to September 15, 2024. The draft for soliciting opinions also clarifies the scope of reference and application, and authorizes relevant departments to formulate implementation measures.

Improving the quality of listed companies

In the past, the number of listed companies within a jurisdiction has always been one of the important indicators for local governments to measure economic development. All regions have been competing for the number of IPO companies and have regarded the cultivation of listed companies as an important means to develop the local economy.

Therefore, many local governments have introduced corresponding policies to directly provide rewards in batches according to the different links of listing guidance, application acceptance, and listing approval, so as to encourage enterprises to go public. Listing rewards and subsidies have thus become a policy of enterprise cultivation and support vigorously promoted by various places.

Almost all regions have introduced relevant reward policies:

In May this year, Qingdao, Shandong proposed to provide subsidies of no more than 10 million yuan in total in stages to companies that plan to go public for the first time; in June, the Management Committee of Chongqing High-tech Zone issued a support measure to provide a one-time reward of 10 million yuan to companies that successfully listed on major overseas securities markets; Anhui Province also issued a document in 2023. On the basis of local rewards, the provincial finance will continue to provide a maximum of 4 million yuan in rewards and subsidies to companies that make their first domestic listing in stages... Beijing, Shanghai, Guangdong, Jiangsu, Zhejiang and other provinces and cities have all issued relevant announcements.

Objectively speaking, the reward and subsidy regulations provide support for the development of enterprises, but we should also be wary of some impacts. For example, some enterprises blindly pursue listing, "brainlessly" queue up for IPOs, or even "pass the IPO with problems", but ignore their own operating conditions and long-term development.

On the other hand, intermediaries play an important role as "gatekeepers" in promoting the listing and financing of companies. However, in the process of providing services for companies' public stock issuance, some intermediaries link their fees with the results of the company's stock issuance and listing, which induces financial fraud and fraudulent issuance. It is necessary to improve the relevant system and standardize the relevant charging behavior.

As the Regulations emphasize, the CPC Central Committee and the State Council attach great importance to the healthy development of the capital market. The Central Financial Work Conference emphasized that efforts should be made to regulate market order, cultivate independent, objective, fair and standardized intermediary institutions, comprehensively strengthen financial supervision, and promote the high-quality development of my country's financial sector.

andImproving the quality of listed companies is an inherent requirement for promoting the healthy development of the capital market, which concerns the vital interests of the majority of investors.

Looking back at the beginning of 2024, the China Securities Regulatory Commission sent a strong regulatory signal for the capital market, focusing on strictly controlling IPO access and improving the quality of listed companies from the source, with an emphasis on the entire chain of issuance and listing review and supervision.

Subsequently, a series of highly anticipated policies were introduced: On April 12, the State Council issued the "Several Opinions on Supervision, Risk Prevention and Promotion of High-quality Development of the Capital Market", referred to as the new "Nine National Policies" for the capital market, which once again stated that the issuance and listing access should be strictly controlled, such as increasingMotherboard、GEMListing standards, perfectScience and Technology Innovation BoardThe evaluation standards for scientific and technological innovation attributes emphasize strengthening the foundation and strict supervision and management.

Adhere to quality first and strictly control IPO access. As the listing threshold becomes more stringent, this year's IPO market is undergoing a major adjustment. According to data from the Zero2IPO Research Center, a total of 44 A-share companies were listed in the first half of this year, a year-on-year decrease of 74.6%.

"By prohibiting local governments from giving listing incentives, we can guide companies to rationally choose the time and location of listing based on their actual conditions and market demand, thereby improving the quality of listed companies; the cultivation of listed companies in various localities will also be more standardized," said an investor who declined to be named.

A new page in urban industry competition

This scene reminds me of the formal implementation of the "Regulations on Fair Competition Review" (hereinafter referred to as the "Regulations") on August 1, which clearly stipulates the tax incentives and financial rewards and subsidies of various regions and includes them in the scope of review:

Article 10: Policies and measures drafted by drafting units that have no legal or administrative regulatory basis or have not been approved by the State Council shall not contain the following content that affects production and operation costs:

(1) Granting tax incentives to specific operators;

(2) granting selective and differentiated financial incentives or subsidies to specific operators;

(3) granting preferential treatment to specific operators in terms of acquisition of factors, administrative and institutional fees, government funds, social insurance premiums, etc.;

(IV) Other matters that affect production and operation costs.

This means that the long-standing local "tax-based investment attraction" model has been put on hold. The "tax incentives" and "rewards and subsidies" investment attraction methods that were previously favored by various places have begun to fade from the historical stage. Since the promulgation of the "Regulations", many places have gradually studied the suspension of specific tax incentives and rewards and subsidies, and many regions have successively cleaned up and abolished the tax refund preferential policies that were issued in violation of regulations.

Standardizing rewards and subsidies is committed to breaking the involutionary investment promotion among various places and returning the market to rationality. On July 30, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and deploy economic work in the second half of the year. It clearly mentioned that it is necessary to strengthen industry self-discipline and prevent "involutionary" vicious competition.

Previously, the Third Plenary Session of the 20th CPC Central Committee passed the "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization", which further deployed major reform measures to build a unified national market. This is the basic support and internal requirement for building a new development pattern.

Under the fair competition review, the "reward subsidy policy" is gradually coming to an end. But behind this, local governments have always shouldered the heavy responsibility of cultivating local industries, and their eagerness to compete for emerging industries is beyond words. After all, "the city will prosper if the industry prospers, and the city will be strong if the industry is strong." Industry is the backbone of a city and the driving force of urban development.

At present, the primary market is entering the era of state-owned assets, and such changes will gradually and profoundly affect the venture capital ecosystem. Every move, every bit, is exciting.

Further reading: