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Initial Public Offering and Listing on the Second Board

(2010-11-25)

 
Ⅰ、Issuance Conditions
1.1 The issuer shall satisfy the following conditions before applying for initial public offering :
(1) The issuer shall be a company limited by shares established according to law, with continuous operation for more than three years.
For a company limited by shares which is totally changed from a limited liability company by converting its net assets value as shown in its account book into shares,  the time of continuous operation may be calculated from the day when the limited liability company is established;
(2) Making profit in the recent two consecutive years, with accumulative net profit of not less than RMB10 million in the recent two years and with a continuous growth; or, making profit in the most recent year, with the net profit of not less than RMB5 million, the business income of not less than RMB50 million in the most recent year and the growth rate of business income of not lower than 30% in the recent two years. Net profit shall be calculated on the basis of the amount before or after deducting the excluding extraordinary profit and loss, whichever is smaller;
(3) The net assets at the end of the most recent  period  shall not be less than RMB20 million, and without uncovered loss; and
(4)  The total amount of capital stock after issuance shall not be less than RMB30 million.
1.2 The issuer shall have paid the registered capital in full amount and have  completed the formalities for the transfer of property rights over the assets contributed by the issuer or shareholders as investment. There is no major ownership dispute over the major assets of the issuer .
1.3 The issuer shall mainly operate one business, with the production and operation activities complying with regulations in the laws, administrative rules and the  Articles of Association, as well as the national industrial and environmental protection policies.
1.4 There is no significant change in the major business, directors and senior management of the issuer in the recent two years, and there is no change in the actual controller of the issuer either.
1.5 The issuer shall have a sustained profitability and do not fall under any of the following circumstances:
( 1 ) Its business mode or product or service structure has changed or is about to change to a large extent, which exerts great adverse influence upon its sustained profitability;
( 2 ) Its position in the industry or the business environment of its industry has changed or is about to change to a large extent, which exerts great adverse influence upon its sustained profitability;
( 3 ) There exist risks that great adverse changes would occur in its acquirement or use of such important assets or technologies as trademark, patent, proprietary technology and franchise rights, etc.;
( 4 ) Its business income or net profit in the most recent year is greatly dependent on any affiliated party or client with many uncertainties;
( 5 ) Its net profit in the latest year is mainly from investment yield beyond the consolidated financial statements; and
( 6 ) Other circumstances which would exert great adverse influence upon its sustained profitability.
 1.6 The issuer shall pay the tax legitimately, and enjoy tax preferences conforming to relevant laws and regulations. The business performance of the issuer shall not be greatly dependent on tax preferences.
 1.7 The issuer shall not have major risks of debt repayment and major contingent issues including guarantee, litigation or arbitration that influence its  sustained operation. 
 1.8 The issuer’s equity is clear, and there is no major dispute over the ownership of the shares of the issuer held by its controlling shareholder and shareholders under the control of the controlling shareholder or actual controller .
 1.9 The assets of the issuer shall be complete, its business, personnel, finance and institutions are independent from each other, and it has a complete business system and the capability of market-oriented independent business operation. It  shall have no horizontal competition with its controlling shareholder, actual controller or other enterprise controlled by the actual controller, nor does it have any  connected transaction that is obviously unfair or may severely affect the company’s independence.
 1.10 The issuer has a perfect corporate governance structure, and has established such systems as the shareholders"meeting, board of directorate , board of supervisors  and independent directors, secretaries to directorate and audit committee according to law. The relevant institutions and personnel can perform their duties according to law.
 1.11 The basic accounting work of the issuer is standardized. Its financial statement is prepared in accordance with the accounting standards for enterprises and other relevant accounting systems and can fairly reflect the financial status, business achievements and cash flow of the issuer in all important aspects. A certified public accountant has issued an auditing report with unqualified opinions for such statement.
1.12 The issuer’s internal control system shall be sound and be effectively  implemented, and properly ensure the reliability of financial reports of the company,  legitimacy of production and business operation, efficiency and effect of operation.  A certified public accountant has issued an internal control verification report with unqualified opinion.
 1.13 The issuer shall have a strict capital management system, and no funds  shall be possessed by the controlling shareholder, the actual controller or other enterprises under the control of the controlling shareholder or actual controller by way of loan, repayment of debts for the issuer , advance money for the issuer or other.
 1.14 The Articles of Association of the issuer shall have already defined the limits of examination and approval authority and deliberation procedures of outward guarantees, and there shall be no illegal guarantees for its controlling shareholder, actual controller and other enterprises under their control.
 1.15 The directors, supervisors and senior management of the issuer shall understand relevant laws and regulations concerning issuance and listing, learn about the legal obligations and responsibilities of listed companies and their directors, supervisors and senior management.
 1.16 The directors, supervisors and senior management of the issuer shall obtain the professional qualifications regulated by laws, administrative regulations and rules , and do not fall under any of the following circumstances:
(1) Be prohibited by the CSRC from accessing into the securities market and is still within the prohibited period;  
( 2 )Be imposed on an administrative penalty by the CSRC in the recent three years, or has been publicly decried by a securities exchange in the most recent year ; or
( 3 )Be suspected of being involved in a crime and a case has been placed on file by the judicial organ for investigation and prosecution for that purpose, or be  suspected of being involved in a violation and a case has been placed on file by the CSRC for investigation for that purpose, and there is no express conclusion or opinion yet.  
1.17 The issuer and its shareholders have not issued securities publicly or in other ways without approval of legal authorities in the latest three years, or the  lawbreaking still lasts although they occurred three years ago.
The issuer or any of its shareholders has not publicly issued securities either directly or in any disguised form without approval in the recent three years. Or, if it did publicly issue securities either directly or in any disguised form without approval three years ago, it is not doing it at present.
 1.18 Funds raised by the issuer shall be mainly used for its major business and  have specific purposes. The amount of funds raised by it and the investment projects shall be suitable for its current production and operation scale, financial status, technical level and management capability, etc.
1.19 The issuer shall establish a system for deposit of raised funds for special purposes, and the funds shall be deposited into the special account determined by the board of directors.
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