Four Major Misunderstandings That Need To Be Clarified In Registration System Reform

One mistake is that registration system can not be audited.

In fact, registration system and approval system are audited, but the contents, procedures and methods of audit are different. Under the approval system, the audit focused on financial indicators implies the judgment of the value of the listed company. It shot the so-called bad company with poor financial status. The registration system is concerned about whether the information disclosure of the listed company is in line with the requirements, but does not judge the financial situation. It negaties the company whose information disclosure is defective and does not conform to the formal format requirements.

Therefore, for a company to be registered, it is necessary to disclose the information of the issuer's business, property, financial status, fundraising purpose, directors and company executives and major shareholders, main legal proceedings and all relevant information related to the issuer itself and securities issuance, and bear legal responsibility for the authenticity, comprehensiveness, accuracy and timeliness of these issuers.

Obviously, the audit of registration system focuses on whether information disclosure is compliance, which is a "standard form audit" of the standard of control, but it is not a review or no audit.

Two, it is considered that registration standards are low and new shares may be spammed.

The biggest worry about registration system is that enterprises can go public regardless of profits and losses, assets, good or bad. Under the circumstances of strong impulse of enterprises, the huge pressure of expansion will inevitably result. The result is that the market reform of IPO is not yet in place. The investors of the two tier market have fallen down first, and the reform of capital market must be terrible by sacrificing the cost of the generation of shareholders.

Whether it is in the east or in the west, there must be some basic conditions for an enterprise to issue and go public. It is necessary to go through some necessary auditing procedures. Even if it is a registration system, it is not possible for an enterprise to go public when it wants to be listed. Its registration needs conditions and compliance. Its issuance must be underwritten by investment banks, especially if it can be approved by investors, and its listing must comply with the requirements of the exchange, etc., although it should not look at the administrative face and may not queue up, it must look at the market complexion. Many enterprises may choose to publish and list with the investment bank in a market environment that reflects their company's value and expectation. In fact, whether approved or not.

The practice of other countries and regions also proves that registration system does not lead to the issuance and listing of enterprises, and its impact on the two tier market and investors is more psychological.

Misunderstanding three, we feel that the marketization of registration system can solve the problem.

Difficult question.

The smooth development of registration system must depend on the perfection of the securities market delisting policy and the protection mechanism of investors, but the registration system itself can not solve the delisting problem.

Many investors believe that registration system is strict with the listed companies in terms of information disclosure and legal liability. They can block all kinds of ill packaged enterprises such as "packaging listed" and "fake listing" and so on. Besides, regulatory authorities can also release from the past approval system with issuers, investment banks and intermediaries on a piece of rope.

However, the reality is that the registration system only solves the problem of the birth of a listed company. It can not control death or manage death. Only a strict delisting system can solve the problem of the death of listed companies.

"A number of opinions" laid the foundation for this work. The key is to introduce feasible implementation rules and strictly enforce the law. Otherwise, more systems will become "Scarecrow".

Misunderstanding four.

Paying more attention to company value may promote investment style pformation.

The core of registration system is to give the judgement of company value to the market and give it to investors. The value of the market recognized company is high, and the value of the company which is not recognized is low.

However, factors affecting stock valuation are numerous and complex. Besides company performance, future expectations and industry space, they are also related to many factors such as capital stock, concept and market mentality. Therefore, we can not believe that the investment style of our two tier market will be pferred to blue chip stocks by implementing the registration system reform. In the environment of capital expansion and stock expansion, structural market or sector rotation may be more conducive to maintaining market sentiment and promoting the healthy development of the two level market.