China Securities Regulatory Commission, Sponsorship System for Issue and Listing of Securities Tentative Procedures

Promulgated: December 28 2003
Effective: February 1 2004
Applicability: The Procedures apply to initial public offerings by companies limited by shares and to issue of new shares or convertible corporate bonds by listed companies (Article 2).

Main contents: The Procedures stipulate that only securities institutions or individuals registered with and included in the list of sponsor institutions and sponsor representatives by the China Securities Regulatory Commission (CSRC) are allowed to engage in sponsorship (Article 8). Securities institutions applying for registration should be comprehensive-type securities companies and have at least two sponsor representatives (Article 10). Applicants for sponsor representatives should possess the qualifications to engage in securities business and fulfil such requirements as passing of a recognized sponsor representative proficiency test (Article 11).
Part Three of the Procedures details the responsibilities of sponsor institutions including:

• providing guidance to the issuer before the IPO;
• reviewing qualifications of the issuer before sponsoring their share issue and listing;
• reviewing the issuer's prospectus for its truthfulness, accuracy and completeness;
• making the required undertakings in the sponsor documents;
• taking the initiative to cooperate with the CSRC's examination and verification; and
• continuously supervising the issuer after the listing on its regulated operation, keeping of its undertakings and information disclosure.

A sponsor institution will be suspended from sponsoring for three months if there are falsehoods, misleading statements and major omissions in the application documents such as the prospectus or in the information disclosure documents during the period of continuous supervision, or if the issuer suffers a loss in the year of listing (Article 65).