Shenzhen Stock Exchange: This company will not accept its listing application for three years

Recently, the Shenzhen Stock Exchange issued a "qualification penalty" for the initial offering project of Jingyu Environment, and the issuer and a number of actual controllers, directors, supervisors, intermediaries and a number of signatories were held accountable by the regulator.

The reporter noted that the "qualification penalty" fine issued by the Shenzhen Stock Exchange to Jingyu Environment is the first disciplinary punishment under the Shenzhen Stock Exchange registration system for the issuer of the IPO project not to accept the document temporarily.

According to reports, recently, the Shenzhen Stock Exchange issued the "Shenzhen Stock Exchange Stock Issuance and Listing Review Business Guidelines No. 4 - On-site Supervision (Revised in 2024)", which clearly implements "one supervision to the end" for the projects that are supervised.

Improve the quality of the declaration of enterprises to be listed from the source

A few days ago, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", proposing to strictly control the access to issuance and listing, emphasizing the need to further consolidate the first responsibility of issuers and the "gatekeeper" responsibilities of intermediaries.

Market analysts pointed out that under the registration system, it is the key to improve the quality of the declaration of enterprises to be listed from the source by comprehensively and strictly strengthening the supervision of issuance review and supervision, promoting the enterprises to be listed and the "key minority" to enhance their awareness of integrity, self-discipline and the rule of law, and consolidating their first responsibility for the true and accurate disclosure of information in the issuance application documents, especially in terms of operation and finance.

According to the documents disclosed by the Shenzhen Stock Exchange, because Jingyu Environment and its actual controllers, directors and supervisors deliberately concealed the VAM agreement signed with the investor, did not truthfully explain the relevant information of the main related parties in the review and inquiry response, and failed to follow the requirements of the supervision team in a timely manner during the on-site supervision process. After providing the relevant materials completely, the Shenzhen Stock Exchange imposed a disciplinary punishment on Jingyu Environment for not accepting the issuance and listing application documents submitted by it for three years and imposed a public reprimand, publicly reprimanded the four shareholders who were directly responsible for the violations, and issued a notice of criticism and written warning to the sponsors, law firms, accounting firms and their relevant signatories who failed to verify the gates.

It is worth noting that the "qualification penalty" issued by the Shenzhen Stock Exchange to Jingyu Environment is the first disciplinary punishment under the Shenzhen Stock Exchange's registration system to temporarily refuse to accept documents for IPO project issuers.

"Precise accountability" strictly prevents "passing through with illness"

The reporter observed that in the process of this disciplinary action, three characteristics were presented:

Keep an eye on the "critical minority" and those directly responsible. This time, the "double penalty" was imposed on the company and the directly responsible entity, mainly because the "key minority" of the actual controller, directors and supervisors, as the signatories of the VAM agreement, deliberately concealed the signed VAM agreement and failed to truthfully cooperate with the verification work of the intermediary when they were clearly asked whether there was a VAM agreement during the due diligence process of the intermediary agency.

"The controlling shareholder, actual controller, directors, supervisors and senior executives of the issuer should truthfully cooperate with the intermediary to carry out due diligence and other related work, which is a clear requirement of the review rules and a hard constraint that the company to be listed must comply with under the registration system. For those directly responsible for deliberately concealing information disclosure violations, the Exchange will take strict regulatory measures in accordance with laws and regulations, and assign responsibility to individuals and supervise them. The person in charge of the Shenzhen Stock Exchange pointed out.

Crack down on repeated offenders and serious dishonest behavior. Concealment of VAM agreements and escrow agreements is an old problem that is often committed in the field of issuance and listing review. Although the relevant business rules have clear disclosure requirements in this regard, there are still enterprises that choose to "conceal and not report", resulting in complaints and reports during the review process, or being sued and "exposed" after listing, which affects the company's business development. These recurrent problems reflect that the integrity and self-discipline, the awareness of the rule of law, and the effectiveness of internal control of enterprises to be listed need to be further enhanced.

In response to the repeated old problems and serious dishonest behaviors of the major shareholders of Jingyu Environment, such as deliberately concealing the VAM in the drawer and failing to provide relevant materials in a timely and complete manner in accordance with the requirements of the supervision group, the Shenzhen Stock Exchange has strengthened the intensity of self-discipline supervision and punishment, and imposed a "qualification penalty" and public reprimand for "not accepting the listing application documents submitted by the issuer for three years", which reflects the "strict supervision and strict management" of the Shenzhen Stock Exchange and the stricter regulatory orientation in the future.

Strengthen the "declaration is responsible", and strictly prevent "withdrawal as soon as the governor" and "breaking through with illness". Jingyu Environment withdrew its listing application after on-site supervision by the Shenzhen Stock Exchange, but still received fines, and intermediaries such as sponsors, lawyers, accountants, and a number of responsible personnel were "double fined", reflecting the regulatory orientation of the Shenzhen Stock Exchange to severely punish "withdrawal as soon as the supervision" and "breaking through with illness".

According to the relevant person in charge of the Shenzhen Stock Exchange, the Shenzhen Stock Exchange will strictly implement the requirements of "long teeth and thorns" and angular supervision, while comprehensively strengthening supervision and enhancing the effectiveness of supervision, distinguish the responsibilities of different violating entities, and strive to consolidate the information disclosure responsibilities of companies to be listed and the "key minority" through "precise accountability", and the verification and gatekeeping responsibilities of intermediaries, so as to promote all parties in the market to truly return to their responsibilities.

Editor-in-charge: Li Dan

Proofreader: Li Lingfeng

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