CSRC answers questions on ＂three types of shareholders＂

On January 12, 2018, the CSRC held a press conference. The spokesperson Chang Depeng informed the CSRC of the administrative penalties imposed on five cases, and finally answered the reporter’s questions.

Q: Recently, market public opinion has reflected that there is a clear audit policy for the "three types of shareholders" problems encountered by companies listed on the New Third Board in the process of applying for IPO. Excuse me, how to grasp it in the issuance review?

A: Since 2016, with the gradual increase in the number of IPO applications by companies listed on the New Third Board, some companies have emerged "three types of shareholders" such as contractual private equity funds, asset management plans and trust plans. In view of the particularity of the "three types of shareholders", there may be problems such as layer-by-layer nesting and high leverage, as well as opaque and impenetrable shareholder identity, which should be paid special attention to in the IPO issuance review process. Previously, some enterprises under review took the initiative to clean up the "three types of shareholders".

Considering that the issue of "three types of shareholders" involves not only the IPO regulatory policy, but also the development of the New Third Board, the CSRC has handled the issue of "three types of shareholders" very carefully. After repeated research and argumentation, it has recently made clear that there are regulatory policies for "three types of shareholders" when companies listed on the New Third Board apply for IPO, as follows:

First, based on the basic requirements of securities law, company law and IPO method, the stability of the company and the clarity of controlling shareholders and actual controllers are the basic conditions. In order to ensure the stability of the company to be listed and ensure the controlling shareholders to fulfill their fiduciary obligations, the controlling shareholders, actual controllers and the largest shareholders of the company are required not to be "three types of shareholders"; Second, in view of the fact that the management department is currently standardizing the asset management business, in order to ensure that the "three types of shareholders" are established and standardized according to law, they are required to be included in the effective supervision of the financial supervision department; Third, in order to prevent the transfer of interests from the source, prevent and control potential risks, strictly supervise highly leveraged structured products and nested investment entities, require issuers with the above situations to propose rectification plans that meet the regulatory requirements, and make penetrating disclosure of "three types of shareholders", and at the same time require intermediaries to check whether issuers and their stakeholders directly or indirectly hold rights and interests in "three types of shareholders"; Fourth, in order to ensure that it can meet the current lock-up period and reduction rules, the "three types of shareholders" are required to make reasonable arrangements for their duration.