Another company’s IPO prospectus failed in “writing”.
The official website of the CSRC recently disclosed the reply to the inquiry letter on the examination of the application documents for the initial public offering and listing on the gem of Guangdong Siquan new materials Co., Ltd. (hereinafter referred to as “Siquan new materials”).
In this 329 page document, the issue of “information disclosure” attracted people’s attention – “the prospectus is lengthy and there are a lot of repetitive contents… The information disclosure is lack of pertinence and the effective information for investors’ decision-making is insufficient”, which requires “the issuer to make comprehensive amendments”.
Insiders said that the prospectus is the main carrier of information disclosure in the stock issuance stage under the registration system. Sponsors and securities service institutions should further pay more attention to the quality of information disclosure in the prospectus and compact the responsibility of “gatekeeper”.
relevant contents of the prospectus
was asked to completely modify
According to the reply document, Shenzhen Stock Exchange determined that Siquan Xincai “has a lengthy prospectus and a large number of repetitive contents. The industry information disclosure includes some general information of the industry. The information disclosure is lack of pertinence and the effective information for investors’ decision-making is insufficient.”
source: Official Website of CSRC
As required by Shenzhen Stock Exchange, publisher “Comprehensively modify and improve the contents of relevant chapters of the prospectus, and describe the issuer’s main business, main products and their core technology threshold, the issuer’s industry status, business model, technical level and competitive advantages and disadvantages in concise and plain language; delete policies and regulations, industry development status and difficult to understand professional terms unrelated to the issuer’s main products and business 。”
According to the official website of the CSRC, the IPO application of Siquan Xincai gem was accepted on June 29, 2021, and the updated prospectus was disclosed on December 28, 2021. On January 14, 2022, the reply to the first round of inquiry was published. The reply showed that there were 22 questions in the first round of inquiry. The sponsor of Siquan Xincai’s IPO is China Greatwall Securities Co.Ltd(002939) .
important sections of multiple prospectus
was asked to rewrite
It is worth noting that Siquan Xincai is not the only one named for the unqualified “writing” of some contents of the prospectus. In September 2021, three companies applying for the sci-tech innovation board were required to rewrite important chapters of the prospectus in the first round of inquiries.
According to the official website of the CSRC, the documents disclosed on September 27, 2021 show that Longda shares is required to rewrite the chapter of “business and technology” to match the relevant content with the issuer’s product sales revenue structure, objectively reflect the issuer’s business situation, and delete redundant content.
According to the documents disclosed on September 10, 2021, Jingsong intelligent is required to rewrite the chapter of “business and technology” according to the fact that the revenue during the reporting period mainly comes from the intelligent logistics system.
According to the documents disclosed on September 3, 2021, UFIDA automobile was required to rewrite the relevant chapters of “operating revenue analysis” and “operating cost analysis”, especially the analysis of the causes of revenue growth and cost changes.
Two of the three companies were asked to rewrite the “business and technology” chapter.
Insiders said that the focus of the issuer’s description should match its product sales revenue structure and objectively reflect the company’s business situation. It is not allowed to repeat the business with a small proportion of revenue in the reporting period simply because the focus of future business development is transferred or the industry to which the product belongs is more favorable for demonstrating the attributes of science and innovation.
further compaction of “gatekeeper” responsibility
It is understood that the sponsors of the three Sci-tech Innovation Board IPO companies required to rewrite important chapters in the first round of inquiry in September 2021 involve Guosen Securities Co.Ltd(002736) , Huaying securities, Huaan Securities Co.Ltd(600909) and Guotai Junan Securities Co.Ltd(601211) securities.
The aforementioned insiders said that the prospectus is not only an important window for investors to understand a company to be listed, but also an important basis for the research department of securities companies to write research reports. The quality of prospectus writing is objectively related to the quality of issuer’s information disclosure. “The core of the registration system is information disclosure, which requires the issuer to present a comprehensive and transparent enterprise to the market. Sponsors and securities service institutions should further pay more attention to the quality of information disclosure in the prospectus and compact the responsibility of ‘gatekeeper’.”
On October 29, 2021, the CSRC solicited opinions from the public on the guidance on improving the quality of information disclosure of prospectus under the registration system (Draft for comments), and planned to take comprehensive measures to improve the quality of information disclosure of prospectus.
One of the main contents of the guiding opinions is to urge issuers and intermediaries to return and fulfill their responsibilities, and write and prepare high-quality prospectus. The issuer and relevant personnel shall ensure that the contents of the prospectus are true, accurate and complete, and cooperate with the intermediary institutions in their work according to law; All intermediaries shall be responsible and conscientiously carry out the writing and preparation of the prospectus in accordance with the division of responsibilities. When writing the prospectus, the issuer and intermediary institutions shall reduce compliance information and redundant information, disclose it in close combination with the issuer’s own characteristics, and pay attention to optimizing the language expression and layout design of the prospectus.
