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Kechuang board is one step closer! The first round of inquiry of the first company! The first round of inquiries revealed five types of problems. See the top ten key points.

May 15, 2019 00:09
Author: Dan Cheng
source: Brokerage China

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Summary
[The first round of inquiry for the first company! The first round of inquiries revealed five types of problems to see the top ten key points] On May 14, Shenzhen Microcore Biotechnology Co., Ltd. responded to the second round of inquiries of the Shanghai Stock Exchange. This is the first company to enter the second round of inquiry and reply, submitting the application. In the second round of inquiries, there was only one month before and after. In response to the latest developments in the science and technology board, the Shanghai Stock Exchange gave detailed responses through three questions and three answers, including the situation of the first round of inquiry by the science and technology board, the problems of the issuers and intermediaries, and the characteristics of the second round of inquiries. .

Kechuang board is one step closer! The first round of inquiry of the first company! The first round of inquiries revealed five types of problems. Some sponsors touched the bottom line and were named. See the top ten key points.

The first two rounds of inquiries responded to the company!

On May 14th, Shenzhen Microchip Biotechnology Co., Ltd. responded to the second round of inquiries from the Shanghai Stock Exchange. This is the first company to enter the second round of inquiry and reply. From the submission of the application to the second round of inquiry, there is only one month before and after.

In response to the latest developments in the science and technology board,The Shanghai Stock Exchange gave a detailed response through three questions and three answers.This includes the case of the first round of inquiry by the science and technology board, the problems of the issuer and the intermediary, and the characteristics of the second round of inquiries.

From the official statement, the main contents are as follows:

1. The Shanghai Stock Exchange has issued 86 first-round enquiries, each with an average of more than 40 questions. Among them, the “description” issue accounted for about 10%, the “verification” issue accounted for about 50%, and the “disclosure” issue accounted for about 40%.

2. According to the rules of the Exchange's audit, once the content of the inquiry is made public, the issuer and the intermediary will begin to bear legal responsibility for its authenticity, accuracy and completeness.

3. As of May 14, more than 71 companies have disclosed the first round of inquiries. In the reply, there are situations in which the avoidance of weight is light and the questions are not answered. Some of the responses are deliberately avoiding shortcomings and exaggerating the words. Some of the responses are lengthy and confusing. The revised prospectus is mostly for addition and no subtraction. Some of the responses are not required, and will not be added. The contents of the prospectus are highlighted.

4. A small number of sponsors arbitrarily modify the important financial data in the disclosed prospectus, and individual sponsors even violate the practice standards and revise the questions of the Shanghai Stock Exchange.

5. For a small number of improper acts such as arbitrarily modifying the inquiry question, the Shanghai Stock Exchange has requested to explain and correct it through face-to-face interviews and secondary inquiries. Subsequently, based on further verification, strict self-regulatory measures will be taken.

6. At present, the Shanghai Stock Exchange issued a total of 29 second rounds of inquiries, one of which has been replied to Shenzhen Microcore Biotechnology Co., Ltd.

7. One question, two questions and even multiple rounds of inquiries, which are connected and progressed in the review process and mechanism, are an important basis for the follow-up review bodies and the listing committee to conduct audits and judgments. After the first question, the applicant company and relevant intermediaries will generally accept the second round of inquiries.

8. On the basis of the first round of inquiries and responses, the second round of inquiries will be more prominent, more focused on key issues, and more focused on revealing risks. The questioning method of the second round of inquiries is also different from the first round of inquiries. It is more streamlined and more integrated. The second round of inquiries that have been disclosed has 14 questions, which is significantly less than the first round of inquiries.

9. From the content point of view, the question of the second round of inquiries is mainly for the first round of inquiry and reply to the issuer's property and technological advancement, whether the issuer meets the conditions for issuance and listing conditions, legal compliance in information disclosure and finance. Whether the authenticity, the risks unique to the growth and development of science and technology enterprises, and other major issues are clear and clear, and whether the relevant information disclosure has reached the full, consistent and understandable requirements. If it is still not in place, it will ask the issuer for further explanation or full disclosure, and ask the intermediary to further verify.

10. After the second round of inquiry and reply, if the SSE believes that it still needs to continue to inquire, it will conduct multiple rounds of inquiries within the prescribed time limit; if it does not need to continue to inquire, it will enter the review meeting in accordance with the rules and procedures to form a preliminary review opinion. Follow-up links such as the deliberation of the Listing Committee and the registration of the CSRC.

  Focus 1: Microcore Bio becomes the first two rounds of inquiries to respond to enterprises

Microcore Biotech submitted a prospectus on March 27, the first round of inquiries on April 23, and a second round of inquiries on May 14. From submitting an application to a second round of inquiries, there was only one month before and after.

In the second round of inquiries, the Shanghai Stock Exchange asked 14 questions, including the capitalization and expense of R&D expenditures, the identification of actual controllers and the stability of control rights, the change of directors' executives, the exclusive use of proprietary technology, and the production of main land. The ownership and relocation effects, core technology platforms, market conditions of major drugs, risk factors, distribution models, marketing fees, production qualifications, etc.

  In the research and development of the market, the concerns of the Shanghai Stock Exchange mainly include:

1. Require the issuer to reply to the disclosure of key audit matters in “Financial Accounting Information and Management Analysis”, and analyze the issuer’s R&D expenditure capitalization accounting policy and its specific application in each product according to the “Accounting Standards for Business Enterprises”. The requirements of the standard and the provision for impairment of development expenditure are sufficient;

2. The reasons for the large difference between the tax deductible amount and the R&D expense amount, please list the detailed items and corresponding amounts for explanation;

3. The internal control system of the company's R&D expenditure, including project management, financial accounting and expenditure control, etc., is sound and effective;

4. Is there any situation in which expenditures that should be included in management expenses and sales expenses are included in research and development expenses or development expenditures, or expenditures that should be included in research and development expenses are included in development expenditures;

5. Disclosure of the cumulative R&D investment of the issuer's listed drugs and R&D pipeline products, and whether the relevant new drug R&D investment and success rate are in line with the general laws of the industry.

The Shanghai Stock Exchange said that on the basis of the first round of inquiries and responses, the second round of inquiries will be more prominent, more focused on key issues, and more focused on revealing risks. The questioning method of the second round of inquiries is also different from the first round of inquiries. It is more streamlined and more integrated. The second round of inquiries that have been disclosed has 14 questions, which is significantly less than the first round of inquiries.

From the content point of view, the second round of inquiries is mainly for the first round of inquiries, the issuer's property and technological advancement, the issuer's compliance with the conditions of issuance and listing conditions, legal compliance and financial authenticity in information disclosure. Whether the major risks such as the risks inherent in the growth and development of science and technology enterprises are clear and clear, and whether the relevant information disclosure has reached the full, consistent and understandable requirements. If it is still not in place, it will ask the issuer for further explanation or full disclosure, and ask the intermediary to further verify.

Concern 2: The first round of inquiries is fine and many is to compact the responsibility of the letter

As of May 14, most of the early-stage applicants accepted the first round of inquiries, and there were 86 first-round inquiries. According to statistics, the average number of inquiries in the first round was more than 40. The content of the inquiries was comprehensive, in-depth and specific, and the length of the inquiries was longer.

The reason for this is that the Shanghai Stock Exchange said that in addition to the unsatisfactory quality of the disclosed prospectus and the need to implement a “full medical examination” in the first round of inquiry, it also strengthens the transparency of the exchange and strengthens the intermediary with the pilot registration system. The regulatory arrangements such as customs duties are directly related.

Specifically, the number and level of questions asked by exchanges is directly related to the transparency of the exchange's review and inquiry work. One of the questions asked in the inquiry is that the issuer is required to "describe" matters, involving the issuer's historical evolution, share transfer, and equity changes. In the original audit practice, these special instructions are only available to auditors for review. Under the pilot registration system, the issuance and listing review of the exchange is further open and transparent, including further public review process and audit content. The “description” matters submitted by the issuer as required are an important part of the review process and the content of the review. Disclosure of the way through the audit inquiry is in fact to inform the market more transparently about the audit work, accept the supervision of the market, and investors can also keep track of the issuer's relevant situation with the exchange.

According to the Shanghai Stock Exchange, the content of the issuer's inquiry reply is relatively long. In addition to the reasons for the above-mentioned explanations, it is also directly related to the responsibility of the intermediary agencies such as the compact sponsor. In the audit inquiries, the matters required by the issuer and the items that need to be added to the prospectus require the sponsors and other intermediaries to conduct verification simultaneously, and explain the process, contents and conclusions of the verification in the answer to the questions. In the relatively independent document of the inquiry response letter, the verification requirements and implementation of the public intermediary agency are specific measures to compact the intermediary agency responsibility in the auditing process. The responsibility and responsibility of the intermediary agency are presented in the market and In front of the society, it helps the market parties to supervise their diligence and responsibility, and helps the regulatory agencies to investigate and hold accountability afterwards.

According to the institutional arrangements, in addition to the matters requiring explicit disclosure, the above-mentioned public issuer's explanations and the verification of the intermediary agencies are mostly not included in the prospectus. The purpose is to ensure the succinctness and readability of the information disclosure of the prospectus.

According to preliminary statistics, in the first round of inquiries, the “description” issue accounted for about 10%, the “verification” issue accounted for about 50%, and the “disclosure” issue accounted for about 40%. It should be noted that not including the prospectus does not affect the legally binding nature of the issuer's statement and the intermediary's verification as disclosed in the inquiry response. According to the Exchange's audit rules, once the content is made public, the issuer and the intermediary will begin to assume legal responsibility for its authenticity, accuracy and completeness.

  Focus 3: Modify financial data and inquiries, there are sponsors named

As of May 14, more than 71 companies have disclosed the first round of inquiries. According to the Shanghai Stock Exchange, in general, most issuers and intermediaries pay more attention to the issues raised in the audit inquiries, and can carefully prepare and respond in a targeted manner. Intermediaries can elaborate on the verification process, verification methods, issue verification conclusions, and submit special opinions on matters that need to be verified.On the other hand, in the process of inquiring and responding, there are also some issues that deserve some attention, mainly in the following five aspects:

First, some evasive evasions are light, answer questions, and do not respond to the key points of the questions raised, and some even miss the problem.

Second, some replies deliberately avoid shortcomings and exaggerate their opinions. The basis and reasons for replying to the content are insufficient, and the objectivity and accuracy are questionable.

Third, some of the replies were lengthy, sloppy, and some key content was overwhelmed.

The fourth is the revised prospectus. Most of them only do addition and no subtraction. The deletion is not deleted. The streamlined one is not streamlined. Even the content of the issuer's explanation and the intermediary's verification item reply will be even asked. Place it in the prospectus.

Fifth, some of the responses did not meet the requirements. The contents of the prospectus were not highlighted. A few sponsors arbitrarily revised the important financial data in the disclosed prospectus. Individual sponsors even violated the practice standards and revised the issue of the Shanghai Stock Exchange.

The Shanghai Stock Exchange hopes that the issuers and intermediaries will attach great importance to it and avoid it. Together with the exchange review institutions, the registration system will be promoted. The Exchange will also continue to pay attention to the rectification of these issues in the follow-up review. For a small number of unauthorized acts such as arbitrarily modifying the inquiry, the Shanghai Stock Exchange has requested to explain and correct it through face-to-face interviews and secondary inquiries. Subsequently, based on further verification, strict self-regulatory measures will be taken.

Focus 4: Determine whether to continue to inquire depending on the situation

At present, the first round of inquiries is being disclosed in a centralized manner and will enter a peak period. The relevant departments of the China Securities Regulatory Commission are also in the first round of inquiries and responses in the dynamic tracking and attention review, and guide the Exchange Science and Technology Board Audit Center to do the audit work.

According to the Shanghai Stock Exchange, the open inquiry-based audit is an important mechanism for the board of directors to issue a listing audit. The purpose is to “ask a true company” and at the same time let the market participants fully understand the quality and value of the company based on the full disclosure of information. Make investment judgments. One of the questions, two questions and even multiple rounds of inquiries, in the review process and mechanism, and the progressive progress, is an important basis for the follow-up review body and the listing committee to review and judge. The process of multiple rounds of enquiries is based on the comprehensive inquiry, the process of continuously highlighting the key points and focusing on the issues, and constantly supervising the process of realizing the true, accurate and complete disclosure of information by issuers and intermediaries. It is also a deterrent to fraudulent issuance and convenient investment. The supervisory process of making investment decisions based on sufficient information.

According to the “Regulations for the Issuance and Listing of Stocks in the Stock Exchange” of the Shanghai Stock Exchange, after the first round of inquiry and inquiry, if the new need to ask questions, or the reply of the issuer and its sponsors and securities service institutions failed to answer the SSE in a targeted manner If the audit inquiry submitted by the listing and auditing institution is issued, or the information disclosure of the issuer still fails to meet the requirements of the China Securities Regulatory Commission and the Shanghai Stock Exchange, the Shanghai Stock Exchange may continue to submit the first ten working days after receiving the first round of inquiry from the issuer. Second round of audit inquiries. From the current situation, after the first question, the applicants and relevant intermediaries will generally accept the second round of inquiries.

According to the Shanghai Stock Exchange, in accordance with the “Regulations for the Issuance and Listing of Shares of the Science and Technology Board”, the audit inquiries can be conducted in multiple rounds. After the second round of inquiries, if the SSE believes that it still needs to continue to inquire, it will conduct multiple rounds of inquiries within the prescribed time limit; if it does not need to continue to inquire, it will enter the review meeting in accordance with the rules and procedures to form a preliminary review opinion. Follow-up sessions such as the review of the municipal party committee and the registration of the CSRC. In addition, the first round of inquiries from other accepting companies is also progressing in a normal and orderly manner in accordance with the prescribed time and procedures.

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  Science and Technology Board audit insists on putting quality first. The Shanghai Stock Exchange has issued a second round of inquiries to 29 companies.

  There are five problems in the first round of the report of the company's application. The Shanghai Stock Exchange has conducted face-to-face interviews on some misconducts.

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(Article source: brokerage China)

                (Editor: DF512)

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