Changes cannot be made arbitrarily; supervision over changes to listed companies' fundraising and investment projects needs to be strengthened.

How can we strengthen the supervision of fundraising projects under the new refinancing policy?

According to relevant statistics, as of March 19, there have been 578 changes to fundraising projects by listed companies this year. Among them, 286 projects changed their fundraising direction, while others modified the implementation entity, fundraising amount, implementation location, and other matters.

Looking at the sources of funds for these changed fundraising projects, some came from IPOs, while others originated from private placements, convertible bonds, and other refinancing methods. In terms of the timing of these changes, some fundraising projects were unable to be completed as originally planned several years after funds were in place, leading to changes. Additionally, some projects adjusted the implementation entity, location, amount, and other matters within just a few months of securing funding.

For A-share listed companies, changes to fundraising projects have become quite common. However, for a listed company, a change in a fundraising project is not a trivial matter. This fundraising project may have once embodied the company’s hopes for future development and the expectations of investors regarding the company’s growth. Otherwise, why would the listed company initiate this fundraising project, and why would investors participate in its fundraising? Now, if this fundraising project can change on a whim, where does that leave the company’s future development, and doesn’t it undermine the investors’ expectations? Thus, listed companies must treat changes to fundraising projects with caution.

The frequent occurrence of changes in fundraising projects at listed companies is primarily due to two reasons. First, the establishment of fundraising projects lacks rigor. Some companies create fundraising projects that are nothing more than fabrications, solely aimed at raising money from the market; thus, such projects lack feasibility in reality, requiring changes after funds are secured, or simply using the raised funds to supplement working capital. Other companies may not fabricate projects, but they lack in-depth market research when establishing fundraising projects, resulting in a lack of foresight and development vision, which leads to the projects not being implemented properly. Even if they are implemented, the benefits generated often fall far short of expectations.

Second, the supervision of changes to fundraising projects is relatively lenient, lacking accountability mechanisms. Changes to fundraising projects are essentially “internal affairs” of the listed company, merely going through internal processes and ultimately only needing to be submitted for shareholder approval. Since changes to fundraising projects become “internal affairs” of the company, there is naturally no question of accountability. As long as the money from the market is secured, how it is ultimately spent is the company’s “internal affair.” This is also a significant reason why listed companies do not rigorously establish fundraising projects, leading some companies to fabricate projects simply to raise funds from the market.

The issue of changes to fundraising projects by listed companies has been ongoing for a long time, but it has attracted market attention recently due to the optimization of the new refinancing policy by the Shanghai and Shenzhen Stock Exchanges, which supports refinancing that “favors excellent enterprises and technologies.” The new refinancing policy introduced by the exchanges is intended to “favor excellent enterprises and technologies,” thereby opening a “green light” for related companies’ refinancing. If companies continue to engage in past practices after refinancing, changing fundraising projects or even using the raised funds to supplement liquidity, ultimately turning it into investment management, wouldn’t this tarnish the “favoring excellent enterprises and technologies” policy? Therefore, it is necessary to strengthen the supervision of changes to fundraising projects and no longer allow changes to happen at will.

First, the establishment of fundraising projects must include a feasibility analysis report, and relevant responsible persons must be clearly identified. If a fundraising project is terminated, the responsible persons should be held accountable; in addition to imposing a certain amount of penalties, their administrative positions in the company should also be revoked to urge listed companies to treat the establishment of fundraising projects rigorously.

Second, if a fundraising project is terminated, the raised funds should be returned to the market through a cancellation-style buyback. For projects that need to be changed, the new fundraising project must also have a feasibility analysis report, and someone must be responsible for the new fundraising project. If the new fundraising project encounters issues again, the relevant responsible persons should be held accountable.

Third, companies that change fundraising projects or whose projects do not meet performance standards after completion should be restricted from refinancing, prohibiting them from continuing to raise funds from the market for at least five years, to ensure the quality of fundraising projects and avoid listed companies substituting inferior projects or even fabricating fundraising projects to deceive investors.

Author’s statement: Personal opinion, for reference only.