Legal column

Link popularity

Business

Initial Public Offering and Listing of Shares

(2010-11-25)

 
OFFERING CONDITIONS
 
1.1 Qualifications of Issuer
1.1.1 The issuer shall be a company limited by shares established in accordance with the law and legally existing.
  With the approval of the State Council, a limited liability company may, when it is converted into a company limited by shares in accordance with the law, adopt the method of establishment by way of share offer and make a public offering of shares.
  1.1.2 The issuer shall have continuously operated for three or more years after the establishment of the company limited by shares, unless otherwise approved by the State Council.
  If a limited liability company is converted into a company limited by shares by converting the entire original net asset value on the book into shares, the period of its continuous operation may commence from the date of establishment of the limited liability company.
  1.1.3 The registered capital of the issuer shall have been fully paid, the procedures for transfer of property rights of the assets used for capital contribution by the promoter or the shareholders shall have been completed, and there shall not be any major ownership dispute over the main assets of the issuer. 
  1.1.4 The production and operation of the issuer shall be in conformity with the provisions of laws and administrative regulations and the company"s articles of association and in line with the industrial policy of the State.
  1.1.5 In the last three years, there shall have been no major change in the major businesses, directors and senior management personnel of the issuer, and there shall have been no change in its actual controlling person.
  1.1.6
The equity interests in the issuer shall be clear, and there shall be no major ownership dispute over the shares in the issuer held by the controlling shareholder and by the shareholders that are controlled by the controlling shareholder or actual controlling person.

1.2 Independence

  1.2.1 The issuer shall have a complete business system and the capability of operating independently and directly in the market. 
  1.2.2 The assets of the issuer shall be integral. A production enterprise shall have the production system, auxiliary production systems and supporting facilities that are related to production and operation, legally possess the ownership of or use rights to the land, factory buildings, machineries and equipment, as well as trademarks, patents and non-patented technology that are related to the production and operation, and have independent raw material procurement and product sales systems. Non-production enterprises shall have the business system and relevant assets that are related to their operation.
  1.2.3 The personnel of the issuer shall be independent. The senior management personnel of the issuer, such as the general manager, deputy general manager, person in charge of finance and secretary to the board of directors, shall not hold any position other than the position of director or supervisor in the controlling shareholder, actual controlling person or other enterprises controlled by them, nor shall they receive salaries from the controlling shareholder, actual controlling person or other enterprises controlled by them. The financial personnel of the issuer may not concurrently hold positions in the controlling shareholder, actual controlling person or other enterprises controlled by them.
  1.2.4 The finance of the issuer shall be independent. The issuer shall establish an independent financial accounting system, shall be able to make financial decisions independently, and shall have a compliant financial accounting system and a financial management system for its branches and/or subsidiaries. The issuer shall not share a bank account with the controlling shareholder, actual controlling person and other enterprises controlled by them.
  1.2.5 The organizational structure of the issuer shall be independent. The issuer shall establish a sound internal operation and management organization to independently perform the functions of operation and management, and there shall not be a mixing of organizations between the issuer and the controlling shareholder, actual controlling person and other enterprises controlled by them.
  1.2.6 The business of the issuer shall be independent. The business of the issuer shall be independent from the controlling shareholder, actual controlling person and other enterprises controlled by them. There shall not be competition in the same industry, or any connected transaction that is not conducted on an arms" length basis between the issuer and the controlling shareholder, actual controlling person and other enterprises controlled by them.
  1.2.7 There shall not be other serious defects in the issuer"s independence.

1.3 Standardized Operation

  1.3.1 The issuer shall have established sound systems of shareholders" general meeting, board of directors, board of supervisors, independent directors and secretary to board of directors in accordance with the law, and the relevant organizations and personnel shall be capable of performing their duties in accordance with the law. 
  1.3.2 The directors, supervisors and senior management personnel of the issuer shall understand the laws and regulations relating to the issuance and listing of shares and shall be aware of the statutory obligations and liabilities of a listed company and its directors, supervisors and senior management personnel.
  1.3.3 The directors, supervisors and senior management personnel of the issuer shall meet the employment qualifications prescribed by laws, administrative regulations and rules and shall not be in any of the following circumstances: 
(1)      having been subject to the measure of securities market entry denial imposed by the CSRC and the entry denial period has not expired;
(2)      having been subject to administrative penalty by the CSRC within the most recent 36 months or to public reprimand by a stock exchange within the most recent 12 months; or
(3)      having been subject to formal investigation by the judicial authority for suspected involvement in a crime or to formal investigation by the CSRC for suspected involvement in violation of laws or regulations, and there has been no clear conclusion yet.
1.3.4 The internal control system of the issuer shall be sound and effectively implemented, and shall be able to reasonably ensure the reliability of financial reports, the lawfulness of production and operation and the efficiency and result of operation.
  1.3.5 The issuer shall not be in any of the following circumstances:
(1)within the most recent 36 months, it has made a public offer or disguised public offer of securities without the verification and approval of the statutory authority; or the relevant illegal act is still continuing at the moment although it was committed more than 36 months before;
(2)within the most recent 36 months, it has been subject to administrative penalty for violation of laws and administrative regulations relating to industry and commerce administration, taxation, land administration, environmental protection, customs and others areas, and the circumstances are serious;
(3)within the most recent 36 months, it has submitted an offer application to the CSRC but the offer application documents submitted contained false records, misleading representations or major omissions; or it did not meet the offering conditions but has obtained approval of offer by deceptive means; or it interfered with the examination and verification of the CSRC and its share issuance examination committee by improper means; or it has falsified or altered the signatures and seals of the issuer or its directors, supervisors or senior management personnel;
(4)the offer application documents submitted for the current offer contain false records, misleading representations or major omissions;
(5)it is subject to formal investigation by the judicial authority for suspected involvement in a crime and there has been no clear conclusion yet; or
(6)other circumstances where the lawful rights and interests of investors and the public interests are seriously harmed.
1.3.6 The company"s articles of association of the issuer shall have specified the examination and approval authority and deliberation procedures for provision of security to external parties, and no security has been provided to the controlling shareholder, actual controlling person and other enterprises controlled by them in violation of provisions.
  1.3.7 The issuer shall have a rigorous fund management system, and its funds shall not be used by the controlling shareholder, actual controlling person or other enterprises controlled by them in the form of loans, debt repayment or payment on its behalf or in other forms of fund appropriation.

1.4 Finance and Accounting

  1.4.1 The assets of the issuer shall be of good quality, the asset and liability structure shall be reasonable, the profitability shall be relatively strong and the cash flow shall be normal.
  1.4.2 The internal control of the issuer shall be effective in all major aspects, and a certified public accountant shall have issued an internal control attestation report with an unqualified conclusion.
  1.4.3 The basic accounting work of the issuer shall be standardized and the financial statements shall be prepared in accordance with the provisions of the enterprise accounting standards and the relevant accounting systems, fairly reflecting the financial status, business results and cash flow of the issuer in all major aspects, and a certified public accountant shall have issued an unqualified audit report.
  1.4.4 The financial statements prepared by the issuer shall be based on the transactions or matters that have actually occurred. Due care shall be maintained in conducting accounting recognition, measurement and reporting. Consistent accounting policy shall be used for identical or similar economic activities without arbitrary changes. 
  1.4.5 The issuer shall fully disclose its relationship with connected parties and appropriately disclose its connected transactions according to the principle of importance. The prices in connected transactions shall be fair and there shall be no manipulation of profits through connected transactions.
  1.4.6 The issuer shall meet the following conditions:
(1)the net profits in the last three fiscal years shall be positive and exceed RMB 30 million in aggregate; the net profits shall be calculated on the basis of the lower of the net profits before and after deducting non-recurring profits and losses;
(2)the net cash flow from business operation in the last three fiscal years shall exceed RMB 50 million in aggregate; or the business revenue in the last three fiscal years shall exceed RMB 300 million in aggregate;
(3)the total amount of share capital before the offer shall not be less than RMB 30 million;
(4)the intangible assets as at the end of the last reporting period (after deducting land use rights, aquaculture rights, mining rights, etc.) shall not account for more than 20% of the net assets; and
(5)there shall be no loss that has not been made up as at the end of the last reporting period.
1.4.7The issuer shall have paid taxes in accordance with the law and all tax preferential treatments shall comply with the provisions of laws and regulations. The business results of the issuer shall not be heavily reliant on the preferential tax treatments. 
  1.4.8 The issuer shall not be subject to major debt repayment risks, nor shall it be subject to major contingencies that affect its continued operation such as security, litigation and arbitration.
  1.4.9 None of the following circumstances may exist in the documents submitted by the issuers:
(1)deliberate omission or fabrication of any transaction, matter or other important information;
(2)abuse of any accounting policy or accounting estimate; or
(3)manipulation, falsification or alteration of any accounting record or relevant vouchers on which the preparation of financial statements is based.
1.4.10 The issuer may not be in any of the following circumstances that affects its continued profitability:
(1)the business model or the type or structure of products or services of the issuer has undergone or will undergo a major change that has or will have a major adverse effect on the continued profitability of the issuer;
(2)the position of the issuer in the industry or the business environment of the industry in which the issuer is operating has undergone or will undergo a major change that has or will have a major adverse effect on the continued profitability of the issuer;
(3)the business revenue or net profit of the issuer in the most recent fiscal year is heavily reliant on a connected party or a customer with a high degree of uncertainty;
(4)the net profit of the issuer in the most recent fiscal year has been primarily derived from the investment returns outside the scope of the consolidated financial statements;
(5)there is a risk of major adverse change in the availability or use of the major assets or technology, such as trademarks, patents, proprietary technology and franchise rights, that are being used by the issuer; or
(6)other circumstances that may have a major adverse effect on the continued profitability of the issuer.
北京上门按摩