Administrative Measures for the Issuance of Securities by Listed Companies
Administrative Measures for the Issuance of Securities by Listed Companies
Administrative Measures for the Issuance of Securities by Listed Companies
Order of China Securities Regulatory Commission [2006] No. 30
May 6, 2006
The Administrative Measures for the Issuance of Securities by Listed Companies, which were deliberated and passed established at the 178th executive meeting of the chairmen of the China Securities Regulatory Commission on April 26, 2006, shall come into force as of May 8, 2006.
China Securities Regulatory Commission: Shang Fulin
Chapter I General Provisions
Article 1 In order to regulate the issuance of securities by listed companies and protect the legitimate rights and interests of investors as well as social and public interests, the following Measures have been formulated in accordance with both the Securities Law and Company Law of the People's Republic of China.
Article 2 Listed companies which apply to issue securities within China shall be governed by these Measures.
The securities referred to in these Measures are of the following types:
1. Stocks;
2. Convertible corporate bonds;
3. Other types as recognized by China Securities Regulatory Commission (hereinafter referred to as the CSRC).
Article 3 A listed company may publicly issue securities towards unspecified or specified objects.
Article 5 In the event that the CSRC approves the issuance of securities of a listed company, this does not mean that the CSRC makes any substantial judgment or guarantee concerning the investment value of the securities or the proceeds of the investors. The investors who subscribe to the securities shall bear all investment risks arising from the changes in business operations and proceeds of the listed company.
Chapter II Conditions for the Public Issuance of Securities
Section 1 General Provisions
Article 6 A listed company which satisfies the following provisions shall be deemed a soundly maintained and highly operational organizational structure:
1. The articles of association must be lawful and effective. There are sound bylaws for the assembly of shareholders, the board of directors, the board of supervisors, and independent directors, all of whom should perform their respective functions in accordance with the law;
2. The company has internal control bylaws that ensure operational efficiency, lawfulness and compliance to the regulations of the company, and the reliability of financial reports. There are no serious defects in regard to the completeness, reasonableness and validity of the internal control bylaws;
3. All incumbent directors, supervisors and senior management members must be qualified for their posts and able to faithfully and diligently perform their duties. None of them shall have committed any act in violation of Article 148 or Article 149 of the Company Law of the People's Republic of China or been given any administrative punishment by the CSRC within the past 36 months. Furthermore, they shall not have been publicly condemned by the stock exchange within the past 12 months;
4. The listed company must separate its personnel, assets and financial affairs from those of the controlling shareholder or the actual controller. It is independent in terms of its institutions and business operations and shall independently carry out business operations and oversee management;
5. The listed company must not have provided any illegal guaranty to any outsider within the past 12 months.
Article 7 A listed company which meets the following provisions shall be deemed to have sustainable profit-making abilities:
1. It has maintained a favorable balance for the past 3 consecutive fiscal years as calculated on the basis of the net profits after deduction of the non-regular profits and losses or the pre-deduction net profits, whichever is smaller;
2. It has relatively stable sources of business and profit and does not substantially rely upon its controlling shareholder or actual controller;
3. It can continue its present primary business or investment trend in a sustainable manner. It must have a sound mode of business operation and investment plan as well as favorable prospects for the marketing of its primary products or services. There should be no seriously unfavorable imminent or foreseeable change in the business operation environment and market demands;
4. The senior management members and the core technicians must be stable with no seriously unfavorable changes in the past 12 months;
5. The important assets, core technologies or other important interests shall have been lawfully obtained and can be continuously utilized. There should be no seriously imminent or foreseeable unfavorable change therein;
6. There must be no guaranty, lawsuit, arbitration or any other important matter that is likely to seriously affect the sustainable business operations of the company; and
7. In the event that any securities have been publicly issued within the past 24 months, there should be no decrease in the business profits of the current year of the issuance by 50% or more than the previous year.
Article 8 A listed company which satisfies the following provisions shall be deemed to be in good financial status:
1. Its basic accounting work is standard and strictly complies with the uniform accounting system of the state;
2. For the financial statements of the past three years and the past 1 period, there should be no audit report with reserved opinions or negative opinions as issued by certified accountants or on which it is difficult for certified accountant to express their opinions. If an audit report with no reserved opinions but containing emphasized matters is issued by a certified public accountant, the matters involved must have no seriously unfavorable effect on the issuer of securities or the seriously unfavorable effect must have been eliminated prior to the issuance of securities;
3. The assets must be of good quality. The non-performing assets may not result in any seriously unfavorable effect on the financial status of the company;
4. The listed company's business outcomes must be genuine and the cash flow must be normal. It must have strictly complied with the relevant accounting standards of the state in the recognition of its business incomes, costs and expenses. It shall have made full and reasonable provisions for asset impairment in the past three years and has never manipulated its business performances; and
5. The profits which it has accumulatively distributed in cash or in stocks may not be less than 20% of the average annual distributable profits realized in the past 3 years.
Article 9 A listed company must have no false record in its financial and accounting documents within the past 36 months and may not have committed any of the following serious illegal acts:
1. It must not have violated any securities law, administrative regulation or rules, or have been subject to any administrative punishment by the CSRC or been given any form of criminal punishment;
2. It must not have violated any law, administrative regulation or rules of industry and commerce, tax, land, environmental protection or customs, or have subject to any administrative punishment, very serious circumstance, or become subject to any criminal punishment; or
3. It must not have committed other acts in violation of other laws or administrative regulations of the state, of which the circumstances are serious.
Article 10 The amount and utilization of the funds raised by a listed company must satisfy the following provisions:
1. The amount of funds raised shall not exceed the required amount of the project;
2. The purposes of use of the raised funds must be in line with the industrial policies of the state as well as the laws and administrative regulations on environmental protection and land management;
3. Except for a financial enterprise, funds raised at the present time must not be used as financial investments such as holding transactional financial assets or financial assets available for sale. It may not be borrowed by others or used as entrusted financing, nor may it be used to invest directly or 4.indirectly in any company which engages primarily in the buying and selling of securities;
5.
......