The problems of investment banking of sponsors attending the meeting reveal “three failures” on their part. First, failure to make adequate preparations for issuance and listing. Some issuers and sponsors still took chances and liked to “occupy seats”. They didn’t fully correct their prominent problems in internal governance and internal control before applying for issuance or listing. Second, failure to perform their duties diligently and responsibly. Some sponsors were passive and did superficial work during review. They were unable to answer queries about important matters such as issuers’ business operation or accounting treatments or to provide a reasonable explanation. They retreated after receiving a field supervision or field inspection. Third, failure to understand the positioning of the ChiNext Board correctly. Some sponsors lacked understanding of the main role of the ChiNext Board to serve innovation-oriented companies and growth companies. A few applicants failed to meet the applicant requirements of the ChiNext Board on innovative, productive, and creative enterprises, and conventional industries integrated with new technology, new industry, new business form, and new model. They withdrew the application on their own or were rejected during the listing review.

The talk held by SZSE aimed to strengthen the performance of the duties of the “three lines of defense” in investment banking and required sponsors to work together to guard the access. On the one hand, solid steps should be taken to ensure a good job in basic work such as pre-listing tutoring, due diligence, inspection, etc. On the other hand, the check-and-balance role of internal control departments such as quality control department and internal audit department against the business department should be further brought into play, so as to strengthen the quality control in the practice of investment banking business. Relevant personnel from those sponsors said they would actively adopt remediation measures to strengthen their performance of the duties of the “three lines of defense”, have their project teams train new staff, and their quality control and internal audit departments get involved in relevant projects earlier in the project approval stage. Meanwhile, they will earnestly implement the “one vote veto system” by the person in charge of internal audit. They will be more serious on tutoring and prudent in project application.

Over the past two years since the launch of the pilot project of the registration-based IPO system on the ChiNext Board, SZSE has always been strictly guarding the access to ensure the quality of listed companies. It has comprehensively employed regulatory measures like review query, field supervision and self-discipline regulation to see sponsors’ duties as “gatekeepers” properly performed. Holding a talk timely is a daily regulatory measure of issuance and listing review. It has a positive role in urging sponsors to improve their practice. Regarding violations found during acceptance of applications, review, and field supervision, SZSE adheres to the rule that those who have applied should take responsibilities, adopts corresponding regulatory measures according to regulations, and firmly and seriously imposes punishment. So far, SZSE has initiated a field supervision at 109 intermediaries for IPOs, refinancing and reorganization projects, and requested CSRC to conduct a field inspection at four issuers. SZSE has issued 160Letters on Regulatory Workto issuers, intermediaries and relevant personnel and held 11 talks for warning purpose. SZSE has given 51 oral or written warnings as regulatory measures, and took 13 disciplinary actions in the form of circulation of a notice of criticism, denouncement and refusal to accept application documents within a specified period of time.

Relevant official of SZSE indicated that whether intermediaries, especially sponsors, duly perform their responsibilities as “gatekeepers” of the capital market, directly determines the quality of projects declared under the registration-based IPO system, the review quality and the information disclosure quality. Next, SZSE will strictly put in place relevant requirements of theGuidelines on Urging Securities Companies to Fulfill Their Responsibilities in Investment Banking under the Registration-based IPO System. Regarding those who withdraw applications after inspection and those who fail to do a proper job in review, SZSE will step up efforts in field supervision and regulatory accountability. It will deal with actions strictly and quickly, enhance the deterrence of daily regulation, and continue to urge sponsors to strictly guard the access to the ChiNext Board, to lay a solid foundation for the implementation of the registration-based IPO system across the board.