Recently, the Shanghai Stock Exchange (SSE) decided to circulate a notice on criticizing sponsoring representatives Wan Jiuqing and Mo Peng. The two sponsoring representatives were appointed by China International Capital Corporation Limited (CICC) to be specifically responsible for the project of Traffic Control Technology Co., Ltd. (TCT) applying for IPO on the sci-tech innovation board.
It was found that on April 28, 2019, in the “Replies of Traffic Control Technology Co., Ltd. to the Inquiry Letter for the Review of the Application Documents on IPO of A-shares and Listing on the Sci-tech Innovation Board” submitted to the SSE and the revised prospectus filed simultaneously, Wan and Mo, as the specific persons in charge of the sponsoring work, arbitrarily revised the information disclosure data and contents such as business data, operations and technologies and analysis of management teams in several parts of the prospectus, and then made a number of changes to the relevant contents of the prospectus quoted in the questions raised by the SSE in inquiries. The above-mentioned amendments were not in the format of the regular script marked in the bold as required by the SSE, nor were the amendments reported to the SSE. In addition, the amendments were not submitted to CICC’s internal audit department for examination and inspection in accordance with the practice norms for the sponsoring business and the internal control system of CICC. After the violation occurred, CICC and its sponsoring representatives Wan and Mo were able to recognize the mistakes in their behaviors and correct them as required.
In the written decision on disciplinary action, the SSE points out that the submitted prospectus and replies to the inquiries for issuance and listing review are important documents in the review of the stock issuance and listing, which the market and investors pay close attention to. Wan and Mo, as the sponsoring representatives appointed by CICC, should have abided by the business rules and industry norms, been honest and trustworthy as well as diligent and conscientious, earnestly answered the questions in the inquiries as required, and reported the revised contents of the prospectus. Actually, the above-mentioned misconducts violated the relevant provisions of the “Measures for Registration Administration of IPO on the Sci-tech Innovation Board (for Trial Implementation)” and the “SSE Rules for Review of Stock Issuance and Listing on the Sci-tech Innovation Board”, and were also against the practice norms for the sponsoring representatives. Based on the facts ascertained, the sponsoring representatives Wan and Mo are the persons directly responsible for the violations. According to the examination opinions of the disciplinary action committee, the SSE circulated a notice to criticize Wan and Mo. The disciplinary decision will be reported to the China Securities Regulatory Commission (CSRC) and recorded in the file of sponsoring representative’s practice quality evaluation and integrity.
The occurrence of the above-mentioned violations also indicates that CICC, as a sponsoring institution, has loopholes in the management of sponsoring representative business, the internal quality control of the sponsoring business and other areas. In this regard, the SSE has taken a separate regulatory measure of written warning for the company, so as to urge it to further strengthen supervision and management of the sponsoring business and sponsoring representatives in the related projects of applying for issuance and listing on the sci-tech innovation board.
As the issuance and listing review for the sci-tech innovation board is an important part of the pilot registration-based IPO system, it is necessary to adhere to the focus on information disclosure, and tighten the responsibility of the intermediaries for controlling the quality of information disclosure. Going forward, the SSE will strictly crack down on the violations found during the process of issuance and listing review in accordance with the rules. It is hoped that all sponsoring institutions, sponsoring representatives and other intermediaries and their related responsible persons could learn from the lessons of the violations and disciplinary actions, earnestly perform their duties, and conduct comprehensive inspection and verification of the information disclosure documents prepared and submitted, so as to jointly advance smooth and orderly implementation of launching the sci-tech innovation board and piloting the registration-based IPO system.