The China Securities Regulatory Commission (CSRC) hereby promulgates the “Rules of Contents and Format of Information Disclosure by Companies Offering Securities No.27 -- Issuance Sponsorship Letter and Issuance Sponsorship Report”. It shall enter into force on April 1, 2009.

 

March 27, 2009

 

Rules of Contents and Format of Information Disclosure by Companies Offering Securities No.27 -- Issuance Sponsorship Letter and Issuance Sponsorship Report

 

Chapter I General Provisions

Article 1 In order to standardize the submission of issuance sponsorship letters and issuance sponsorship reports, enhance the information disclosure of securities issuance as well as promote the practice standard of sponsors and their representatives of sponsor, the Rules is formulated according to the provisions in the “Securities Law” and the “Administrative Measures on Sponsorship for Issuing and Listing of Securities” (the “Administrative Measures”).

 

Article 2 A sponsors engaged by a company limited by shares who applies for initial public offering and listing and a listed company who issues new shares or convertible bonds (hereinafter referred to as the issuer) shall issue an issuance sponsorship letter and an issuance sponsorship report in accordance with the Rules.

 

Article 3 An issuance sponsorship letter is not only a formal legal document issued by the sponsor and its representative of sponsor for recommending the issuer’s securities issuance, but also an important criteria to appraise the credibility and diligence of the sponsor and its representative of sponsor in dealing with sponsorship.

 

Article 4 The sponsor shall state clear opinions on issues including the qualification and major risks of the issuer, the connected relationship between the sponsor and the issuer and the recommendation conclusion from the sponsor in the issuance sponsorship letter.

 

Article 5 An issuance sponsorship report is a complementary document for an issuance sponsorship letter. The sponsor shall comprehensively record the main working process for dutiful recommendation of the issuer, make detailed remarks on the main problems of the issuer and relevant solutions in the process of dutiful recommendation as well as fully reveal the major risks of the issuer in the issuance sponsorship report.

 

Article 6 Concerning problems or risks having great influence on the investment decisions to be made by investors, an issuance sponsorship report shall attach great importance to them and make disclosure about them, give a specific and complete statement and analysis as well as make remarks on solutions of main problems.

 

Article 7 An issuance sponsorship letter and an issuance sponsorship report shall be based on a full investigation on the issuer and full understanding of its operation status, risks as well as problems, and be supported by corresponding working papers of sponsorship.

 

Article 8 Whether the sponsor and its representative of sponsor are credible and diligent or not in accordance to relevant laws and regulations including the “Company Law of the People's Republic of China” (the “Company Law”) and the “Securities Law” and relevant provisions of the China Securities Regulatory Commission (CSRC), whether they give issuance sponsorship letters and issuance sponsorship reports in compliance with the business rules, industry practice criterion and moral code formulated based on laws, and whether the issued documents are of authenticity, accuracy and completeness shall be clearly stated at the beginning of an issuance sponsorship letter and an issuance sponsorship report.

 

Article 9 After submitting an issuance sponsorship letter and an issuance sponsorship report, the sponsor shall supplement and update the aforesaid letter and report in time in case that there is significant change to the issuer and the securities issuance conditions are affected by the change.

 

Chapter II Indispensable Contents of Issuance Sponsorship Letter

 

Section 1 Basic Information of the Securities Issuance 

 

Article 10 The sponsor shall brief information of the representative of sponsor in charge of the recommendation, including his/her name, experiences in sponsorship, etc.

 

Article 11 The sponsor shall brief the co-organizer of the securities issuance project and other members of the project team, including their names, practices of the sponsorship and etc.

 

Article 12 The sponsor shall brief the information of the issuer, including its name, registered place & registration time, contact method, business scope and classification of the securities issuance, etc. List companies who non-publicly issue shares shall also disclose the latest equity structure of the issuer, top 10 shareholders, previous financing, statements of cash dividend and change of net assets as well as major financial data and indicators.

 

Article 13 The sponsor shall make specification on the following situations between the issuer and the sponsor:

1. the information of holding shares in the issuer or the issuer’s controlling shareholder, actual controller or significant related parties by the sponsor or the sponsor’s controlling shareholder, actual controller or significant related parties;

2. the information of holding shares in the sponsor or the sponsor’s controlling shareholder, actual controller or significant related parties by the issuer or the issuer’s controlling shareholder, actual controller or significant related parties;

3. the information of ownership of the issuer’s equity and the office-holding in the issuer of the representative of sponsor and its spouse, the sponsor’s directors, supervisors and senior management;

4. the information of providing mutual guarantees and financing between the sponsor’s controlling shareholder, actual controller or significant related parties and the issuer’s controlling shareholder, actual controller or significant related parties;

5. other connected relationship between the sponsor and the issuer.

In case of the aforesaid situations, the possible influence on fair performance of the sponsorship by the sponsor and its representative of sponsor shall be emphasized. 

 

Article 14 The sponsor shall brief its internal procedures for examination and verification and internal opinions on verification.

 

Section 2 The Sponsor’s Commitments

 

Article 15 The sponsor shall promise that it has conducted due diligence and prudent verification on the issuer, its controlling shareholder and actual controller in terms of laws, administrative regulations and provisions of the CSRC; it has agreed to recommend the issuer for issuing and listing of securities and issue the recommendation letter of issuance.

 

Article 16 The sponsor shall make a commitment concerning the issues under Article 33 in the “Administrative Measures”.

 

Section 3 Recommendation Opinions on the Securities Issuance

 

Article 17 The sponsor shall clearly state its recommendation conclusion on the securities issuance on the basis of due diligence and prudent verification.

 

Article 18 The sponsor shall make remarks item by item on whether the issuer fulfills the “Company Law”, the “Securities Law” and decision-making procedures prescribed by the CSRC or not concerning the securities issuance.

 

Article 19 The sponsor shall make remarks item by item on whether the securities issuance meets the issuance conditions prescribed by the “Securities Law” or not.

 

Article 20 The sponsor shall make remarks item by item on whether the securities issuance meets the issuance conditions prescribed by the “Measures for the Administration of Initial Public Offering and Listing of Stocks” or the “Administrative Measures for the Issuance of Securities by Listed Companies” or not, and state clearly the verification process and facts for every conclusion.

 

Article 21 Considering the factors that affect sustained profitability including the issuer’s industry status, management mode, product structure, business environment, major clients, significant assets as well as technology, the sponsor shall make detailed remarks on the issuer’s existing principal risks and briefly assess the development prospect of the issuer.

 

Article 22 The issuance sponsorship letter shall be signed by the legal representative of the sponsor, principals for the sponsorship and internal check, the representative of sponsor as well as project co-organizer, and be sealed by the sponsor and marked with the signing date.　

 

Chapter III Indispensable Details of the Report on Issuance Sponsorship

 

Section 1 The Project Operation Procedures

 

Article 23 The sponsor shall make detailed remarks on its internal procedures for project examination and verification.

 

Article 24 The sponsor shall make detailed remarks on major initiation and examination procedures for the securities issuance project, including the application time for the initiation, the member composition of the appraisal and decision-making authority for the initiation as well as the appraisal time for the initiation.

 

Article 25 The sponsor shall make detailed remarks on major procedures for the project execution of the securities issuance, including the member composition of the project execution, the time for entering the spot, the main procedures for due diligence, and working hours also main procedures for participating in due diligence by the representative of sponsor.

 

Article 26 The sponsor shall make detailed remarks on main procedures for examining and verifying the securities issuance project by the internal verification authority, including its member composition, on-the-spot verification frequency and working hours.

 

Article 27 The sponsor shall make detailed remarks on examination and verification procedures for the issuer’s securities issuance project by the internal verification group, including the member composition, conference time, members’ opinions and voting results of the group.

 

Section 2 Existing Problems of the Project and Solutions

 

Article 28 The sponsor shall make detailed remarks on opinions also examination and discussion of members of the appraisal and decision-making authority for the project initiation.

 

Article 29 The sponsor shall make detailed remarks on the main problems discovered and focused by executors of the project in the process of due diligence and executors’ research, analysis and settlement of the aforesaid problems (e.g., coordinate the issuer and securities service agencies to convene periodic meetings, thematic meetings or special meetings of significant events), and emphasize the solutions on main problems.

 

Article 30 The sponsor shall make detailed remarks item by item on main problems focused by the internal verification authority, and explain the implementation of opinions from the internal verification authority.

 

Article 31 The sponsor shall make detailed remarks item by item on main problems and audit opinions discussed at the meeting of the internal verification group, and explain the implementation of opinions from the internal verification group.

 

Article 32 The sponsor shall state the examination on the professional advice issued by the securities service agency and make remarks on the differences between the professional advice from the securities service agency and the judgment from the sponsor. For great differences, detailed remarks on the process of study and settlement shall also be made.

 

Article 33 The report on issuance sponsorship shall be signed by the legal representative of the sponsor, principals for the sponsorship, the internal check and the sponsorship authority, the representative of sponsor as well as the project co-organizer, sealed by the sponsor and marked with the signing date.

 

Chapter IV Supplementary Provision

Article 34 The Rules shall become effective from April 1, 2009 onwards.