IPO review highlights for NEEQ-listed companies

The number of National Equities Exchange and Quotation (NEEQ) listed companies submitting IPO applications is on the rise due to inadequate access to capital on the NEEQ with poor liquidity. July 2017 saw 22 NEEQ-listed companies submitting IPO applications to the IPO Review Committee of the China Securities Regulatory Commission (CSRC), compared with eight from the beginning of the year to early July 2017 (see the accompanying table), of which seven were granted approval and one received a review cancellation notice. Of the seven approved companies, five have launched an IPO and the other two are still waiting.

The authors have summarized the CSRC’s IPO review focuses for NEEQ-listed companies based on relevant documents disclosed by the five companies listed in the table that have launched an IPO, including without limitation their prospectus, attorney’s work report and legal opinion. The following sections provide an overview of these review focuses.

Trading of the listed shares on the NEEQ. In feedback to Guangpu, the CSRC requested the intermediaries to provide “a description about trading of the issuer’s shares when they were being listed on the National Equities Exchange and Quotation” and “a disclosure on change of shareholders immediately upon the filing”. In oral feedback to Xintian, the CSRC required intermediaries to “conduct an examination on those who became shareholders after the issuer’s listing on the NEEQ, and provide a statement as to whether any affiliation or transfer of benefits was involved”.