China Securities Regulatory Commission, Questions Relevant to the Engagement in Lead Distributing Business for Share Issues by Securities Companies Guidance Opinion

Issued: March 17 2001
Effective: as of date of issue
Interpreting authority: China Securities Regulatory Commission
Applicability: Lead distributing business includes lead distributing of initial public offers, rights issues and new issues (Item One). Securities companies shall also refer to the Opinion in their sponsorship of issue of convertible corporate bonds (Item 17).

Main contents: The Opinion provides a set of requirements for securities companies that play the role of lead distributor in a share issue. It shall coach its sponsored issuer on the requirements of share listing (Item Three). It shall also set up a qualification assessment system to ensure that all the issuers it sponsors have good internal management, operate lawfully and have growth potential (Item Four). The lead distributor shall set up an internal verification team and internal verification procedures, and base its sponsorship on the results of the internal verification (Items Six and Seven). It shall set up internal firewalls between its investment, research, brokerage and self-account business departments (Item 12). The Opinion has several attachments, including the Key Points in Application Documents for Initial Public Offerings to be Verified by Lead Distributors, which contains 439 verification questions for the lead distributor to ask the issuer. Other attachments include the Essential Contents in Lead Distributor Due Diligence Reports on Issue of New Shares by Listed Companies, and Lead Distributor Checklist for Verification of Application Documents for Issue of New Shares by Listed Companies.
Repealed legislation: China Securities Regulatory Commission, Establishment of Internal Verification Committees for Securities Issues Circular, Dec 2 1999, CLP 2000 No.1 p6 and China Securities Regulatory Commission, Establishment of the System for the Verification by Main Distributors of Application Materials for Securities Issues Circular, Dec 6 1999