The SFC Proposes "Three Iron Rules" For Sponsorship Supervision

The head of the China Securities Regulatory Commission yesterday put forward the "three iron rules" for sponsorship supervision.

"Three irregularities" clearly stated that "the sponsor representative who has not participated in due diligence or due diligence is not in place, and the sponsor representative who has false or omissions in the disclosure of information, the sponsor representative who holds the issuer's shares, and other sponsor agencies and sponsor representatives who have violated the law and regulations shall be dealt with severely according to law."

The person in charge said that although there was a lot of discussion about the issue of "insurance generation holding" in the community, but no one had provided strong clues to the regulatory authorities, nor did the regulatory authorities have verified the evidence. But "as long as we find and verify it, we will deal with it seriously."

Supervise the sponsor's due diligence investigation

It is learnt that in order to strengthen the supervision of sponsorship, the SFC will launch a series of measures next. Among them, the regulatory authorities have drafted the guidelines for internal control of sponsor business, and will be soliciting opinions from the community. "In order to clarify the standards of the internal control system of the sponsor business, promote the construction of the internal control system of the sponsor business, standardize the operation and operation of the sponsor business, and prevent and defuse the risk of the sponsor business, we are going to issue the guidelines this year. The person in charge said that the guidelines would require the sponsor to set up specialized internal control agencies, provide full-time internal control personnel, and improve the process control of the related sponsor business.

"We should transmit the regulatory pressure to the insurance agencies and sponsors." The responsible person said that the relevant departments of the SFC will ask relevant sponsor representatives to answer questions during the audit meeting, such as the feedback meeting and the preliminary examination meeting. When summon the development committee meeting, we should appropriately increase the time for the sponsor representatives to answer questions. In the work papers, the auditors will assess and evaluate the integrity, diligence and quality of the sponsor and sponsor representatives, assess and evaluate the structure into the sponsor credit supervision system, and publish it to the public if necessary.

At the same time, the SFC will further promote on-site inspection, and urge the sponsor agencies to carry out the due diligence, the core, the working papers, the work log and other systems in place. On the basis of checking the internal control system of 14 sponsoring agencies and working papers of 39 sponsor projects last year, the intensity of on-site inspections will be further intensified this year. The main body of inspection will also be developed jointly by the issuing department into the joint inspection of the GEM board, local dispatched agencies and the issuing Department, so as to urge the sponsor agencies to implement the sponsorship system and improve the quality of practice. {page_break}

There are flaws in sponsorship.

Since July 2004, the Jiangsu Qionghua project sponsor representative has adopted the supervision measures of "three months' non acceptance of the recommended items", the issuing supervision department has adopted the "conversation reminder" supervision measures to 20 sponsor representatives or responsible persons, and adopted 7 measures of "recommending no recommendation in a certain period" for 7 sponsor representatives and 1 recommendation agencies, and revoked the qualification of the sponsor representatives of 14 sponsor representatives.

The director pointed out that the inspection work in 2009 found that the problems existed in the practice of sponsoring agencies and insurance agents were mainly as follows: due diligence still needs to be strengthened, and some of them are not even in place. The risks and problems of the issuers have not been fully revealed. The internal control system needs to be further strengthened, the level of wind control needs to be further improved, the quality of the application documents is uneven, and the quality of information disclosure needs to be improved; some projects do not check from the perspective of investors, but are carried out by the mentality of the auditing institutions, and even the broad interpretation rules. Some of them hold the mentality of "breaking the customs" and so on.

He stressed that although there are some problems in development, the implementation of the sponsor system has been outstanding in the past 7 years, which is manifested in the following aspects: first, the sense of responsibility of the sponsor institutions has been increasing, and the quality of the recommended enterprises has been greatly improved. The two is the gradual establishment of the internal control system of sponsoring agencies, especially the deepening of the due diligence system, the core system, the working papers and the work log system, which has greatly improved the quality of the sponsor work. Three, the ranks of investment banks mainly based on sponsor representatives and quasi sponsor representatives are expanding and their quality is constantly improving. Four, industry concentration and brand are gradually forming, and the level of self-discipline is constantly increasing. Five, supervision has been continuously strengthened, and irregularities have been effectively curbed.