I. Entity Qualifications
1. The issuer shall be a joint-stock limited company established by law and legally existing by law.
When a limited liability company is lawfully converted into a joint-stock limited company pursuant to State Council approval, it may issue shares to the public by means of public share offering.
2. Unless otherwise approved by the State Council, the issuer shall operate the joint-stock limited company for a continuous period of three years or more after its establishment.
Where a limited liability company is wholly converted into a joint-stock limited company according to the original book value of its net assets, the continuous operating period shall be calculated from the date the limited liability company is established.
3. The registered capital of the issuer shall have been paid up in full, procedures for transferring the property right attached to assets used as capital contributions by the initiator or shareholders shall have been completed, and there shall be no material dispute over ownership of the issuer's major assets.
4. The business operations of the issuer shall comply with laws and administrative regulations, its articles of association,and the state's industrial policies.
5. There shall have been no significant change in the issuer's principal operations, directors and senior management and no change in its actual controller in the last three years.
6. The issuer's equity structure shall be clear and there shall be no major dispute over the ownership of shares held by the controlling shareholder, controlled shareholders and shareholders controlled by the actual controller.
1. The issuer shall have a complete business structure and the ability to operate in the market directly and independently.
2. The issuer shall maintain the integrity of its assets. Production-oriented enterprises shall have production systems, auxiliary production systems and supporting facilities related to its business operations, legally hold the ownership or use rights for land, plant, machinery, and equipment, as well as trademarks, patents, and non-patent technologies related to its business operations, and shall have an independent system for purchasing raw materials and selling products; non-production-oriented enterprise shall have a business structure and relevant assets related to its business operations.
3. The issuer shall maintain the independence of its personnel. The issuer's general manager, deputy managers, financial controller, secretary to the board of directors and other senior officers shall not serve its controlling shareholder, actual controller or other enterprises under their control in a capacity other than director or supervisor, nor draw a salary from said controlling shareholder, actual controller or other enterprises under their control; the issuer's financial staff shall not serve its controlling shareholder, actual controller or other enterprises under their control in any capacity.
4. The issuer shall maintain its financial independence. The issuer shall establish an independent financial accounting system, be able to make financial decisions independently, and have appropriate financial and accounting systems and a system for the financial management of its branches and subsidiaries; the issuer shall not use a common bank account with its controlling shareholder, actual controller or any other enterprise under their control.
5. The issuer shall maintain the independence of its organizational structure. The issuer shall establish sound internal business management departments to independently exercise business management authority, and shall not combine its departments with those of its controlling shareholder, actual controller or any other enterprise under their control.
6. The issuer shall maintain the independence of its business. The issuer shall maintain its business independent of its controlling shareholder, actual controller or any other enterprise under their control, and shall not compete horizontally withor engage in any apparently unfair transaction its controlling shareholder, actual controller or any other enterprise under their control.
7. The issuer shall not suffer from any other major defect in its independence.
III. Regular Operations
1. The issuer shall have lawfully established sound systems for general meetings, the board of directors, the board of supervisors, independent directors and the secretary to the board of directors so that relevant departments and personnel can perform their duties pursuant to the law.
2. The issuer's directors, supervisors and senior officers shall understand laws and regulations related to the issuance and listing of shares and shall be aware of the statutory responsibilities and obligations of a listed company and its directors, supervisors and senior officers.
3. The issuer's directors, supervisors and senior officers shall have qualifications that conform to the law, regulations and rules, and shall not be subject to any of the following circumstances:
(1) Banned from access to the securities market by the China Securities Regulatory Commission (CSRC), such ban not having been lifted;
(2) Subject to an administrative penalty imposed by the CSRC within the last 36 months or has publicly censured by the Stock Exchange within the last 12 months;
(3) Investigated by the judicial authorities because of a suspected criminal offence or investigated by the CSRC as a result of a suspected legal or regulatory violation, where no definitive and conclusive opinion has been issued;
4. The issuer's system of internal controls shall be sound, have been implemented effectively, and reasonably be capable of ensuring the reliability of its financial reports, the legitimacy of its business activities, and the efficiency and effects of its operations.
5. The issuer shall not be subject to any of the following circumstances:
(1) Where it has issued securities to the public or in a disguised manner without the approval of the statutory authority within the last 36 months; or relevant legal violations that occurred 36 months ago are nevertheless ongoing;
(2) Where it has been subject to administrative penalties within the last 36 months as a result of any violation of laws and regulations related to, among other matters, industry and commerce, taxation, land, environmental protection, and customs, and the circumstances are serious;
(3) Where it has submitted an application to the CSRC within the last 36 months, but the application documents submitted included any false records, misleading statements, or material omissions; or it has obtained issuance approval by deceptive means while not meeting the issuance conditions; or it has interfered with the examination and verification work of the CSRC or its issuance examination and verification committee by improper means; or it has forged or altered the signature or seal of the issuer or the issuer's directors, supervisors or senior officers;
(4) Where the issuance application documents it submits on this occasion include any false records, misleading statements, or material omissions;
(5) Where it has been investigated by the judicial authorities because of a suspected criminal offence and no definite and conclusive opinion has been issued;
(6) Any other circumstances in which investors' lawful rights and interests and the public interest are seriously damaged.
6. The issuer's articles of association shall specify the limits of authority for the examination and approval of external guarantees and deliberation procedures for external guarantees, and no guarantee shall be improperly provided for its controlling shareholder, actual controller or any other enterprise under their control.
7. The issuer shall have a strict fund management system and shall not have funds used by its controlling shareholder,actual controller or any other enterprise under their control in the name of borrowings, debt repayments, advance payments or any other means.
IV. Finance & Accounting
1. The issuer shall have good quality assets, a reasonable asset-liability structure, strong profitability, and normal cash flows.
2. The issuer's internal controls shall be effective in all material respects and the issuer shall have obtained an unqualified internal control certification report issued by a certified public accountant (CPA).
3. The issuer's basic accounting work and the preparation of its financial statements shall comply with the Accounting Standards for Business Enterprises and the Accounting Systems for Business Enterprises, and shall fairly reflect in all material respects of its financial position, the results of operations and cash flows, and the issuer shall have obtained an unqualified audit report issued by a CPA.
4. The issuer shall prepare financial statements on the basis of transactions or events which have actually occurred;when confirming, measuring or submitting accounting records, it shall exercise due prudence; for the same or similar businesses, it shall select the same accounting policy and shall not change it randomly.
5. The issuer shall fully disclose relationships with associated parties and appropriately disclose associated relationships based on the principle of importance. The pricing of associated transactions shall be fair and profits shall not be manipulated through associated transactions.
6. The issuer shall meet the following conditions:
(1) Its net profit has been positive for the last three financial years, with the aggregate amount exceeding RMB 30 million, and net profits shall have been calculated as the lower of the amounts before and after deducting non-recurring losses and profits;
(2) Its cumulative net cash flows from business activities for the last three financial years exceed RMB 50 million; or cumulative business income for the last three years exceeds RMB 300 million;
(3) Its total stock capital before issuance is no less than RMB 30 million;
(4) Its intangible assets (excluding land use rights, marine cultivation rights and mining rights, etc.) do not exceed 20% of net assets at the end of the latest period;
(5) No loss has not been made up for in the latest period.
7. The issuer shall pay tax in accordance with the law and enjoy various tax concessions in accordance with the provisions of relevant laws and regulations. The issuer's business results shall not be heavily reliant on tax concessions.
8. The issuer shall not be subject to any major debt repayment risk or major contingent event such as a guarantee, lawsuit or arbitration proceedings which will adversely affect its continuing operations.
9. The application documents the issuer submits shall not involve any of the following circumstances:
(1) Deliberately omitting or fabricating transactions, events or other important information;
(2) Misusing accounting policies or accounting estimates;
(3) Manipulating, forging or tampering with accounting records or relevant vouchers on which financial statements are based.
10. The issuer shall not be subject to any of the following circumstances which adversely affect its ongoing profitability:
(1) Where there have been or will be significant changes in the issuer's business model and the variety and structure of its products or services which will have a material adverse impact on the ongoing profitability of the issuer;
(2) Where there have been or will be significant changes in the issuer's position in the industry in which it operates or the business environment of such industry which will have a material adverse impact on the ongoing profitability of the issuer;
(3) Where the issuer's business income or net profit for the latest financial year was heavily reliant on any associated party or client for which a material degree of uncertainty exists;
(4) Where the issuer's net profit for the latest financial year was mainly derived from investment income outside the scope of the consolidated financial statements;
(5) Where there is any risk of a material adverse change in the acquisition or use of major assets or technologies used by the issuer such as trademarks, patents, proprietary techniques and franchise rights;
(6) Any other circumstances likely to have a material adverse impact on the ongoing profitability of the issuer.
V. Use of funds raised
1. The funds raised shall be used for clear purposes and shall in principle be used in the issuer's main business.
Other than for financial enterprises, the funds raised shall not be used as held-for-trading financial assets or available-forsale financial assets, or for lending to others, third party managed investments or other financial investments, and shall not be directly or indirectly invested in companies mainly engaged in the trading of securities.
2. The amount of funds raised and investment projects shall be commensurate with the issuer's current scale of business operations, financial position, technical standards and management competence, etc.
3. Investment projects for which the funds raised are used shall comply with the state's industrial policies and with laws,regulations and rules governing, among other matters, investment management, environmental protection, and land management.
4. The issuer's board of directors shall carry out a detailed study on the feasibility of projects for which the funds raised are to be used to ensure that such projects have good prospects and will be profitable, as well as to effectively guard against investment risk and increase the efficiency with which the funds raised are utilized.
5. Projects for which the funds raised are used shall not, when implemented, result in horizontal competition or have any adverse impact on the independence of the issuer.
6. The issuer shall establish a special reserve regime for the funds raised, which shall be deposited in a special account determined by the board of directors.