More regulation of securities sponsors

The sponsorship system in the PRC was established when the Securities Law was promulgated in 2001, and was developed when the Interim Measures for the Administration of the Sponsorship for Issuance and Trading of Securities(Interim Measures) were promulgated in 2003. The sponsorship system under the Interim Measures imposed a positive impact on the PRC capital market and achieved a fair level of success. However, after the PRC capital market was developed further and sponsorship activities increased, the deficiencies of the sponsorship system under the Interim Measures have been exposed: some institutions that do not have enough capital or staff for recommending companies to be listed can qualify as sponsor institutions; some sponsor representatives do not completely fulfil their responsibilities of supervision after the company they recommended is listed; and the internal management of some sponsor institutions is not well disciplined.

    In order to make the sponsorship system work better, the Measures for the Administration of the Sponsorship of the Offering and Listing of Securities (证券发行上市保荐业务管理办法) (Measures) were promulgated on August 14 2008 and took effect on December 1. They replace the Interim Measures and the Measures on the Guidance Work for the Initial Public Offering of Stocks, and intend to amend and optimise the sponsorship system, mainly in the four areas described below.

Sound internal control systems to control quality and efficiency