CSRC: Pilot program for local governments to submit information on proposed publicly listed companies

Mars Finance News, April 10 — The spokesperson for the China Securities Regulatory Commission (CSRC) answered questions from reporters regarding the “Opinions on Deepening the Reform of the Growth Enterprise Market (GEM) and Better Serving the Development of New Quality Productivity.”
Question: What are the main considerations and institutional arrangements for pilot programs where local governments are encouraged to push information about companies planning to issue and list on the GEM?
Answer: The pilot program where local governments push information about companies planning to issue and list is an important exploration in this GEM reform. It aims to promote a better integration of an effective market and proactive government, and to improve the quality of listed companies from the source.
Technology innovation enterprises, especially unprofitable ones, generally feature high R&D investment, significant uncertainty in operational performance, and long profit cycles. How to identify high-quality innovative enterprises with strong innovation capabilities and growth potential has always been a key and challenging aspect of regulatory review and registration work.
Local governments have a better understanding of the operation, compliance, and reputation of enterprises within their jurisdiction. Pushing enterprise information by local governments as a reference helps review departments grasp the situation of companies planning to go public more timely and comprehensively, further improving the quality and efficiency of review and registration.
It also helps allocate limited listing resources more precisely and efficiently to high-quality innovative enterprises, better leveraging the capital market’s role in serving the development of new quality productivity.
The main arrangements for this work are as follows:
First, the push subjects and procedures. Each city’s people’s government is responsible for pushing enterprise information within its jurisdiction, and provincial governments are responsible for pushing information about state-owned enterprises under their administration. After enterprises apply for guidance and filing for issuance and listing, and before submitting their application, local governments can, based on their understanding of the enterprises, compile and form push information, which is then sent to the Shenzhen Stock Exchange and copied to the CSRC.
Second, the conditions and standards for pushing. Enterprises should meet conditions such as being registered locally and operating continuously for no less than three years, aligning with the development direction of new quality productivity, and not engaging in serious illegal activities like financial fraud.
Third, the relationship with review and registration. The CSRC and the Shenzhen Stock Exchange will consider the enterprise information pushed by local governments as a reference during review and registration. The push information from local governments does not replace the primary responsibilities of the CSRC and the exchange for review and registration, nor the responsibilities of issuers or intermediaries as gatekeepers. It does not constitute a substantive judgment or guarantee of the investment value or returns of the pushed enterprises.
It should be clarified that the enterprise information pushed by local governments is only for review and registration reference. The CSRC and the Shenzhen Stock Exchange will strictly perform their review and registration duties according to the relevant rules and procedures for issuance and listing.
Additionally, pushing enterprise information by local governments is not a mandatory procedure for companies to issue and list. The CSRC, the exchange, and local governments do not set targets for pushing enterprise information, and lower-level governments are not required to push enterprise information or to make it a mandatory step for issuance and listing. For enterprises that do not have information pushed by local governments, the CSRC and the exchange will proceed with review and registration according to existing procedures.
To ensure the smooth implementation and effectiveness of the reform, the CSRC and the Shenzhen Stock Exchange will also do the following:
First, strengthen communication and coordination with relevant departments of local governments, organize policy training and business guidance, and facilitate and guide local governments to carry out enterprise information pushing efficiently and with high quality.
Second, regularly provide feedback to local governments on the status of the enterprises they have pushed.
(China Securities Regulatory Commission website)