China Securities Regulatory Commission, Guidelines on the Disclosure of Information Relating to Profitability in Prospectuses for the Initial Public Offering of Shares and the Listing thereof of Companies

The Guidelines also require sponsors and accounting firms to check the veracity and accuracy of the information on the revenue, costs and expenses of an IPO issuer by comparing the issuer's product or service prices, sales volume, prices of major raw material and energy and percentage of sales expenses with those of other listed companies of the same industry (Articles 1-3).

Related legislation: Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof, May 17 2006, CLP 2006 No.6 p.65; Tentative Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof on the Growth Enterprise Market, Mar 31 2009, CLP 2009 No.3 p.32; and Guidelines on the Disclosure of Major Financial Information and Information on the Business Position Since the Financial Report Audit Date in Prospectuses for the Initial Public Offering of Shares and the Listing thereof of Companies, Dec 6 2013, CLP 2014 No.1 p.61

Issued: December 6 2013

Main contents: An IPO issuer of shares shall disclose in its prospectus the following information that has a material impact on its net profit, including but not limited to: the issuer's operating profit, gross profit and net profit for each quarter during the reporting period, an analysis of the main sources of the issuer's net profit and details of the increase and decrease of the net profit and the reasons therefor.

In the case that the difference between the gross profit margins of identical or similar products or services of an IPO issuer and other listed companies of the same industry is prominent, the IPO issuer is required to disclose the reasons and its impact on the issuer's net profit in the prospectus (Article 4).

The Guidelines also require sponsors and accounting firms to check the veracity and accuracy of the information on the revenue, costs and expenses of an IPO issuer by comparing the issuer's product or service prices, sales volume, prices of major raw material and energy and percentage of sales expenses with those of other listed companies of the same industry (Articles 1-3).

Related legislation: Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof, May 17 2006, CLP 2006 No.6 p.65; Tentative Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof on the Growth Enterprise Market, Mar 31 2009, CLP 2009 No.3 p.32; and Guidelines on the Disclosure of Major Financial Information and Information on the Business Position Since the Financial Report Audit Date in Prospectuses for the Initial Public Offering of Shares and the Listing thereof of Companies, Dec 6 2013, CLP 2014 No.1 p.61