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after withdrawing the ipo application, if there are any violations, you will still not escape punishment.

on september 13, the shenzhen stock exchange disclosed four regulatory letters, all related to suzhou aode high-end equipment co., ltd., which had previously applied for an ipo on the growth enterprise market.

the regulatory letter showed that due to violations such as failure to fully disclose the fund borrowing and lending with related parties and third parties during the reporting period; failure to fully disclose internal control deficiencies and irregular corporate governance; irregularities in some accounting treatments and inaccurate disclosure of relevant information, the issuer aode equipment, the sponsor guotou securities, the law firm beijing king & wood mallesons, the accounting firm zhonghui securities and related personnel all received written warning letters from the shenzhen stock exchange.

it is worth mentioning that on july 7, 2023, the china securities association organized a lottery to spot-check the information disclosure quality of initial public offering companies. 11 companies were selected, and aode equipment was on the list. it has undergone on-site inspections by the china securities regulatory commission on the quality of its information disclosure and the professional quality of intermediary institutions.

ipo companies have violated regulations

the shenzhen stock exchange issued a "regulatory letter on suzhou aode high-end equipment co., ltd., zhou dingshan, zhu xinsheng, and yu lixi."

it is reported that the application for listing on the growth enterprise market of suzhou aode high-end equipment co., ltd. (hereinafter referred to as "aode equipment") was accepted on june 30, 2023. the issuance and listing review status was changed to "inquiry" on january 19 this year. on june 8 this year, the company withdrew its listing application and the ipo was terminated.

the shenzhen stock exchange disclosed that after investigation, aode equipment had the following violations:

first, the company failed to fully disclose the fund borrowing and lending with related parties and third parties during the reporting period.

the prospectus (draft filing) shows that during the reporting period, aode equipment had irregular financial internal controls such as borrowing funds from its actual controller zhou dingshan, but the rectification and standardization had been completed before the filing.

the csrc found in an on-site inspection that aode equipment did not fully disclose the fund borrowing with the related natural person zhou moufen (the actual controller's sister) and other non-related third parties. first, it did not fully disclose the fund borrowing with the related party zhou moufen. on january 1, 2018, the company borrowed 6.0702 million yuan from the related natural person zhou moufen and repaid part of the loan before the reporting period. second, it did not fully disclose the large-scale fund borrowing with non-related third parties. during the reporting period, the company borrowed 6.1 million yuan and lent 531,500 yuan to other non-related natural persons, but did not fully disclose the fund borrowing in accordance with the requirements of article 70 of the prospectus standards.

second, the company failed to fully disclose deficiencies in internal controls and irregular corporate governance.

the prospectus (draft filing) shows that aude equipment has established a standardized internal governance structure, and the shareholders' meeting, board of directors and board of supervisors all operate in accordance with the system norms; the internal control system is relatively sound and has played a good management and control role in all key aspects of the company's business management.

the csrc's on-site inspection found that the company had defects in internal control in sales, inventory, research and development, and irregular corporate governance, but failed to fully disclose relevant circumstances, including sales management, the existence of subsequent supplements to sales delivery orders in the erp system, the dates of some delivery orders being later than the shipping date, and the person who prepared and reviewed the order being the same person.

third, some accounting treatments are not standardized and relevant information disclosure is inaccurate.

the csrc's on-site inspection found that the company had many irregularities in accounting treatment and inaccurate disclosure of relevant information. for example, the company failed to accrue and pay union funds in accordance with accounting standards and did not accrue sufficient employee education funds, resulting in inaccurate disclosure of total profits; the accounting treatment of r&d expenses was irregular, and there were cases where mold expenses that could not be distinguished from production expenses were directly included in r&d expenses.

ultimately, as the first responsible party for information disclosure, the shenzhen stock exchange listing review center decided to take self-regulatory measures against aode equipment in the form of a written warning.

public information shows that on july 7 last year, aude equipment was selected by the china securities association from 225 accepted companies as one of the 11 companies to undergo on-site inspection by the china securities regulatory commission.

securities firms, law firms, and accounting firms all received fines

in addition to the proposed listed company aode equipment, relevant intermediary institutions such as securities companies, law firms and accounting firms also received fines.

the shenzhen stock exchange has also taken self-regulatory measures such as written warnings against the sponsor guotou securities and related sponsor representatives.

the shenzhen stock exchange stated that upon investigation, it was found that guotou securities and its two sponsors had failed to pay sufficient attention to and conduct prudent verification of some of the issuer's fund borrowings during the reporting period during the course of their practices; failed to pay sufficient attention to and conduct prudent verification of the issuer's internal control deficiencies and irregularities in corporate governance; and failed to pay sufficient attention to the issuer's irregular accounting treatments and inaccurate information disclosure.

at the same time, the auditing agency zhonghui certified public accountants (special general partnership) (referred to as "zhonghui firm") and the signing certified public accountant received written warning letters.

the shenzhen stock exchange stated that upon investigation, it was found that china huijin exchange and the three registered accountants who signed the project had failed to pay sufficient attention to and conduct prudent verification of some of the issuer's fund borrowings during the reporting period during the course of their practice; failed to pay sufficient attention to and conduct prudent verification of the issuer's internal control deficiencies; and failed to pay sufficient attention to the issuer's irregular accounting treatments and inaccurate information disclosure.

in addition, regarding the relevant law firm beijing king & wood mallesons and the signing lawyers, the shenzhen stock exchange stated that after investigation, beijing king & wood mallesons and the two signing lawyers of the project failed to pay sufficient attention to and conduct prudent verification of the issuer's related-party fund borrowings during the reporting period during the course of their practice; and failed to pay sufficient attention to and conduct prudent verification of the issuer's irregular corporate governance.

therefore, the shenzhen stock exchange adopted self-regulatory measures of written warnings against beijing king & wood mallesons and the signing lawyer.