On Jan. 15, CHI CSRC issued rules to regulate intermediary services.
CHI CSRC, CHI GVT released Regulations on standardizing intermediary services for companies’ public stock issuance in order to enhance the quality of listed companies, protect investors' rights, and promote the stable development of the capital market.
Overview of Regulations
Intermediary institutions (i.e., securities firms, accounting firms, and law firms) must adhere to principles of honesty, integrity, diligence, independence, and objectivity.
They are prohibited from engaging in or supporting illegal activities including financial fraud, fraudulent issuance, or alternatively unauthorized information disclosure.
Documents must not contain false records, misleading statements, major omissions.
Fees charged by intermediary institutions must follow market-oriented principles and cannot be tied to the success of the public offering; accounting firms and law firms must follow established rules for charging fees, as stipulated by relevant regulations.
Authorities such as securities regulators, fiscal departments, and judicial administrative bodies must strengthen coordination and supervision of intermediary conduct.
Penalties for violations by intermediary institutions may include warnings, fines, or suspension of business, while issuers, controlling shareholders will face warnings, fines.
