The China Securities Regulatory Commission released 23 bailouts, focusing on supporting industries in areas severely affected by the epidemic
Author: Du Qingqing
A package of support measures is here.
On the evening of May 20, the China Securities Regulatory Commission issued the “Notice on Further Exercising the Functions of the Capital Market to Support the Accelerated Recovery and Development of Areas and Industries Severely Affected by the Epidemic” (hereinafter referred to as the “Notice”), with 23 articles in full text. Implement extension policies, optimize regulatory work arrangements, and give full play to the role of industry institutions to provide targeted support to areas and industries severely hit by the epidemic.
The “Notice” is mainly aimed at areas such as Shanghai and Jilin that have comprehensively implemented measures such as closure and control management and static management, as well as industries such as catering, retail, tourism, civil aviation, and road, water, and rail transportation that have been severely affected by the epidemic. In the future, dynamic adjustments will be made according to changes in the situation.
Specifically, increasing policy support in terms of corporate IPO, listing on the Beijing Stock Exchange, refinancing, mergers and acquisitions, corporate bonds, asset securitization products, etc.; and extending the time limit for feedback, inquiries, and financial information that need to be submitted and other flexible arrangements; through off-site methods such as video conferences, as well as the reduction or exemption of related fees for listed companies and exchange members, to reflect the flexibility and temperature of supervision; to give full play to the role of securities, fund and futures operating institutions to help fight the epidemic and resume work and production.
Among them, for the IPO of companies in the aforementioned regions and industries, if the sustainable profitability or continuous operation ability is not significantly adversely affected, the review and registration will proceed normally, and the refinancing will implement “specialized person docking, immediate report and review, and immediate issuance after review”.
“Recently, the domestic epidemic situation has been complicated, and the uncertainty of the internal and external environment has increased.” The China Securities Regulatory Commission said that due to multiple factors, some companies, including listed companies, have stopped work and production, their performance has declined, and the costs of mid-stream and downstream listed companies have risen. It is difficult to recover from the impact of the epidemic, and the operating difficulties of privately held and small and medium-sized listed companies have increased significantly.
In the next step, all units and departments of the CSRC system will also solidly promote the implementation of various policies, actively carry out research and visits, understand market difficulties and demands, strengthen communication and collaboration with other departments, and jointly help enterprises solve practical problems. The implementation of various policies has been effective, supporting enterprises to overcome the impact of the epidemic, quickly get out of the predicament, and achieve better development.
Provide targeted support for IPO, refinancing, mergers and acquisitions
The “Notice” stated that four measures will be adopted to increase direct financing support.
First, for companies in areas and industries whose performance has been severely affected by the epidemic in 2022 that applies for IPO, on the premise that they meet the sector positioning and the conditions for issuance and listing, the situation is verified by the intermediary agency and does not have a significant adverse impact on the ability to continue profitability or continuous operation. , the relevant audit or registration work is proceeding normally. Before the end of 2022, the refinancing applications of listed companies in areas and industries seriously affected by the epidemic will be connected with a special person, and the application will be reviewed immediately, and the application will be issued immediately after review.
Second, enterprises in areas and industries severely affected by the epidemic apply for listing on the Beijing Stock Exchange and listing on the National Equities Exchange and Quotations System. If companies in areas and industries severely affected by the epidemic issue corporate bonds and asset securitization products, or if the funds raised from bonds are used in epidemic prevention and control related fields or for repayment of bond products due during the epidemic prevention and control period, a special person will be connected and the report will be made immediately. trial.
The third is that listed companies in areas and industries severely affected by the epidemic apply the “small-sum quick” review mechanism for applications for issuance of shares to purchase assets, and the requirement for cumulative calculation within the last 12 months is no longer applicable when calculating the transaction amount. Where shares are issued to purchase assets at the same time as supporting funds are raised, the restrictions on the proportion of raising supporting funds for supplementing working capital and repaying debts shall be relaxed.
The fourth is to speed up the review progress of public fund products, especially equity funds, anti-epidemic theme funds and other products. Provide support in accordance with laws and regulations for the administrative licensing of related fund products in areas and industries severely affected by the epidemic.
Implement extension policy to reflect regulatory flexibility
In order to alleviate the process problems in the process of enterprise capital operation caused by the epidemic, the “Notice” stated that the extension will be implemented from four aspects.
First, the response time limit for issuers in areas and industries severely affected by the epidemic can be extended by 3 months, and the response time limit for notification letters can be extended by 1 month. For companies in areas and industries severely affected by the epidemic that apply for the issuance of corporate bonds and asset securitization products, the calculation of the time limit for replying to feedback at the review stage and the time limit for suspension will be suspended for 3 months.
Second, if the M&A and reorganization projects of listed companies in areas and industries seriously affected by the epidemic are indeed unable to update their financial information or issue a notice of the general meeting of shareholders, they can apply for an extension of the validity period of financial information or a general meeting of shareholders after fully disclosing the specific impact of the epidemic on the reorganization. The notification period is extended for 1 month and can be extended up to 3 times.
Third, listed companies in areas and industries severely affected by the epidemic can apply for a suspension of the validity period of the approval after obtaining the administrative permit for major asset restructuring, and the maximum period of suspension is 12 months.
The fourth is to support the filing of private funds in areas seriously affected by the epidemic, appropriately extend the time limit for the filing and information submission of the manager’s first private fund, and appropriately relax the signature requirements for private fund registration and filing materials and the requirements for some industrial and commercial materials.
Strengthen online work and optimize regulatory arrangements
The “Notice” proposes 10 optimization measures to facilitate listing review.
The first is to ensure the normal progress of the Issuance Examination Committee, the Restructuring Committee and the Listing Committee through video conferences and other means. Implement the electronic, non-contact reporting and delivery working mechanism during the review or registration process such as IPO, listing on the Beijing Stock Exchange, refinancing, mergers and acquisitions, etc. The guarantee mechanism of online consultation provides efficient and high-quality services.
Second, issuers, listed companies, and intermediaries can submit application materials, inquiries and replies and other relevant documents through electronic signatures. For natural persons who are really affected by the epidemic and cannot sign uniformly, they can apply for the electronically scanned document by providing the signature page.
The third is for companies applying for the issuance of bond products, if they are indeed affected by the epidemic and cannot submit relevant signature and seal documents in a timely manner, the lead underwriter may first issue relevant instructions as the case may be, and then submit supplementary submissions.
Fourth, for enterprises in areas and industries seriously affected by the epidemic, which plan to apply for IPO and listing on the Beijing Stock Exchange with the 2021 annual report before the end of June 2022, if there are difficulties in on-site visits, the CSRC can use electronic network means to conduct counseling and acceptance in advance. For pre-communication, off-site acceptance can be adopted.
Fifth, for companies in areas and industries severely affected by the epidemic that have publicly issued securities and listed them, and whose performance in the year of listing in 2022 has fallen sharply due to the impact of the epidemic, appropriate regulatory tolerance will be given to issuers and relevant sponsors.
Sixth, for newly established securities and fund institutions in areas seriously affected by the epidemic, on-site inspections can be carried out through online video, and follow-up supplementary inspections can be carried out to support companies in obtaining business licenses as soon as possible after meeting the opening conditions.
Seventh, for securities, fund and futures business institutions in areas severely affected by the epidemic, on the premise of maintaining effective supervision, implement more flexible regulatory arrangements, including allowing delays in submitting relevant statements and implementing electronic licensing and filing. After taking effective measures to prevent risks and conflicts of interest and reporting to the CSRC, flexible arrangements are allowed in terms of staffing, isolation checks and balances, and process control.
Eighth, optimize the information disclosure business operation arrangements of the Shanghai and Shenzhen stock exchanges, and appropriately extend the direct information disclosure period. Support market entities to handle business online, and support listed companies to hold online shareholders’ meetings or bond and asset-backed securities holders’ meetings. If lawyers are indeed unable to attend the meeting on-site due to the impact of the epidemic, they can witness the general meeting of shareholders by video and other methods and carry out bookkeeping work.
The ninth is to provide regulatory support for securities companies involved in resolving the liquidity risks of private enterprises, especially listed private enterprises, in the calculation of risk control indicators, the establishment of private equity fund subsidiaries, product filing, and classification and rating.
Tenth, the Shanghai and Shenzhen stock exchanges will exempt listed companies from the initial listing fee, annual listing fee and online voting service fee for the general meeting of shareholders in 2022. The Beijing Stock Exchange will waive the annual listing fee for listed companies in 2022. The National Equities Exchange and Quotations will exempt companies listed in relevant regions from the initial and annual listing fees in 2022. China Clearing will exempt relevant issuers from registration and settlement fees in 2022. All futures exchanges will reduce the handling fees of relevant futures operating institutions and reduce or exempt seat fees. Support all associations to increase member services by waiving and reducing membership fees, deferred payment of membership fees, and free training.
Give full play to the role of industry institutions to help fight the epidemic and resume work and production
For securities companies, fund companies, futures companies, etc., the “Notice” puts forward five requirements to give full play to the role of industry institutions to help resume work and production.
The first is to encourage securities companies to actively play the role of financing intermediaries, and support areas and industries severely affected by the epidemic to carry out equity financing and bond financing. Guide securities companies to negotiate an extension of 3 to 6 months with customers who have difficulty in repaying the equity pledge due to maturity. For margin financing and securities lending customers who are quarantined or treated for epidemic prevention and control, forced liquidation should be minimized and handled flexibly.
The second is to support public fund management companies to practice the concepts of long-term investment, value investment and responsible investment, actively use their own funds to subscribe for their fund products, actively play the role of professional investors, and guide more social funds to flow to anti-epidemic-related enterprises.
The third is to encourage securities companies to set up private equity asset management products, and establish private equity fund products through private equity fund subsidiaries in accordance with the principles of marketization and the rule of law, so as to meet the financing needs of relevant enterprises and reduce financing costs.
The fourth is to give full play to the role of the futures market and the hedging function of futures to assist enterprises in risk management in areas and industries severely affected by the epidemic. We will do a good job in cultivating industrial customers, and steadily expand “futures with stable price orders” to energy and chemical futures such as asphalt and low-sulfur fuel oil. For futures companies with outstanding performance in serving areas and industries severely affected by the epidemic, futures companies will be awarded extra points in the classification evaluation.
Fifth, continue to promote the implementation of more opening-up measures in the capital market, timely understand and respond to the demands and concerns of foreign investors, and ensure that foreign-funded institutions are equally applicable to support policies.
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Responsible editor: Wang Maohua