The Shanghai Stock Exchange ("SSE") has recently enacted and issued the Information Disclosure Guidelines for Financial Statements of Pilot Innovative Red-chip Enterprises on the Science and Technology Innovation Board (the "Guidelines") and the Guide to Business Processing of Sponsors in the Issuance and Listing Examination System for Stocks on the Science and Technology Innovation Board of the Shanghai Stock Exchange, both of which have taken effect immediately from the date of issuance.
The Guidelines provide that red-chip enterprises preparing financial statements under the equivalent accounting standards shall disclose key financial indicators adjusted in accordance with China's Accounting Standards for Business Enterprises, as required by the Rules for the Information Disclosure and Compilation of Companies Publicly Offering Securities No. 24— Special Provisions on the Information in Financial Statements of Pilot Innovative Red-chip Enterprises on the Science and Technology Innovation Board (the "Special Provisions"). Also, the Guidelines expressly state that red-chip enterprises using foreign accounting standards to prepare their financial statements shall, pursuant to requirements set forth in the Special Provisions, publish the financial restatements containing adjustments made in line with China's Accounting Standards for Business Enterprises. Moreover, the Guidelines require that a red-chip enterprise adopting the equivalent accounting standards or foreign accounting standards to prepare its financial statements shall disclose information, in the form of tables, regarding the ownership interest attributable to the parent company and the net profits attributable to the parent company that have been adjusted in accordance with China's Accounting Standards for Business Enterprises.