Dong Shaopeng: Four New Misconceptions About The Registration System Of Stock Issue

In accordance with the requirements of the central leading group for comprehensive deepening reform, the 190 reform initiatives identified by the Fourth Plenary Session of the Central Committee of the CPC Central Committee in the third Plenary Session of the 18th CPC Central Committee and the Fourth Plenary Session of the Central Committee will be issued "construction plans" one after another, and the registration system for new issue is one of them.

The author thinks, first, "registration system reform start" does not mean "registration system reform completed".

In his report on the work of the government, Premier Li Keqiang called for the implementation of the reform of stock issuance registration system, which means that the preparatory work for this reform has been relatively adequate and has formally entered the stage of implementation.

At the national securities and futures supervision conference held in January 15, 2015, the reform path and time schedule for implementing the stock issuance registration system have also been preliminarily defined.

However, the beginning of registration reform does not mean solving all problems at once, but rather step by step.

After the reform is launched, some problems that have not been foreseen in advance will be encountered, such as running in mechanism, perfecting system and Supplementary Clauses.

In this regard, all market participants should have adequate psychological preparation and strategic preparation.

The reform of registration system is dominated by the securities regulatory authorities, mainly to change the power structure of the securities regulatory authorities. However, it is not only the cooperation between the SFC and the exchanges that can be completed, but the participation and coordination of multiple departments.

In addition to listing tickets for listed companies, the daily operation of listed companies also involves business administration, taxation, finance, land, labor, environmental protection and other administrative departments, and also involves the SASAC, customs, health and other administrative departments.

Adhering to the regulatory concept centered on information disclosure and "rationalizing the relationship between the market and the government" are not only reflected in the relationship between the listed companies and the SFC, but also should be reflected in the relationship between the listed companies and all administrative functional departments.

Therefore, the author believes that the CSRC can complete the reform of the registration system, but requires the coordination and support of the reform of the whole administrative system.

At the same time, issuers, sponsors, accountants, lawyers and evaluation agencies will play a full role and decide the scale and price of issuing independently on the basis of compliance with laws.

Xiao Gang said, "the ingenuity of registration system lies in not only solving the problems caused by information asymmetry between issuers and investors, but also standardizing the boundary of responsibilities of regulatory authorities, avoiding excessive intervention by regulatory authorities, no longer endorsing the issuers, but paying much attention to the past performance and future development prospects of enterprises, which are all judged and chosen by investors, and the number and price of shares issued by market players are playing a decisive role in the allocation of resources by the market."

What he said means that the seller and the buyer should compete independently based on the true supply and demand signals to form a trading price, and the regulators should act as fair and just guardians, upright and unjust law enforcement officers.

With information disclosure as the center, the issuers, sponsors, accountants, lawyers and evaluation agencies are required to present the information truthfully; if they fail to do so, they will be punished by the rule of law, the administration and the market.

After the implementation of the registration system, not only the exchange should examine the situation of the listed companies, but also the CSRC should assume the role of "last gatekeeper".

Under such circumstances, it is impossible to make a large-scale "listing craze".

Fourth, after the registration system is implemented, the audit of listed companies will not be relaxed, and will be more stringent.

In the draft of the registration system implementation plan, the audit process that the exchange should perform has been defined, that is, according to the requirements of the information disclosure requirements of the issue and listing, whether the issuer is fully provided with materials, and whether the intermediaries shall perform their duties according to law.

By strengthening the legal constraints of sponsors, accountants and evaluation agencies, the quality of information disclosure of listed companies will be further improved.

At the same time, the SFC still maintains the power to check the materials of issuers and maintain a high level of deterrence against illegal activities.

According to the revised draft of the securities law, the profit index requirements of listed companies will be abolished.

Xiao Gang said it would not allow junk stocks to go public because of this change.

This means that the rules of information disclosure will be more meticulous, in a sense, may be more "cumbersome", will scare some enterprises ready to go public.

Therefore, the registration system is "registered, easy to market", there is no basis.

The author predicts that

The amendment was passed through three trials and passed until about October. The registration system was also implemented at that time.

Before that, the operation of strengthening the responsibility of issuers and related intermediaries will be intensified. The two exchanges will also step up their preparations.

President Xiao Gang has made it clear that when the registration system is being implemented, the listed companies that are queuing up for trial will still be handled according to the rules of approval system to achieve a smooth pition.

We hope that the reform of stock issue registration system can clarify the boundary between the government's administration according to law and the market players in accordance with the law, so that the market can play a decisive role in making the stock price formation mechanism perfect, so as to establish a solid institutional foundation for the long-term healthy development of China's stock market. We believe that registration reform will become a new milestone in the development of China's stock market.