Phoenix TV:

We have noticed that the documents mention strengthening the random selection of companies to be listed and intensify problem-oriented on-site inspections. What are the considerations behind this approach? What are the specific arrangements for the next step? Thank you.

Yan Bojin:

Thank you for your interest in IPO on-site inspection. On-site inspection is an administrative law enforcement measure granted to the CSRC by the Securities Law. In the field of issuance supervision, it serves as an extension and supplement to the written review for IPO applications. In January 2021, the CSRC issued and implemented the "Provisions on On-site Inspection of Initial Public Offering Companies," which stipulated the procedures, methods, and requirements for on-site inspections of IPO companies. Since the implementation of this system, the CSRC has mobilized resources across the entire system and conducted on-site inspections of 100 IPO companies in an orderly manner. Based on the inspection findings, the CSRC has taken various measures, including initiating investigation against three companies that were suspected of financial fraud in accordance with the law. Through rigorous on-site inspections, regulatory pressure has been transmitted to all levels, and the on-site inspection system has played a key role in improving the standardization of information disclosure and preventing financial fraud.

Recently, we have revised the "Provisions on On-site Inspection of Initial Public Offering Companies" based on our practical experience. One of the most important amendments, which has drawn considerable attention, is the clarification that companies withdrawing their listing applications during the on-site inspection process will still undergo thorough investigations. In other words, even if the listing application is withdrawn, we will still conduct the inspections, hold it accountable if necessary. This is to fundamentally address the issue of "withdrawing after inspection" that has occurred in some companies. At the same time, the new regulations have further improved on-site inspection procedures, introduced a mechanism for conducting inspections without prior notification, and emphasized unifying the standards for processing.

Next, we will significantly increase the proportion of on-site inspections. The primary consideration is to simultaneously increase the number of random sampling and problem-oriented on-site inspections, ensuring that the on-site inspection coverage rate is no less than one-third of the companies to be listed. For signs of fraudulent issuance and financial fraud discovered during on-site inspections, once verified, we will severely punish them. Through this approach, we will effectively deter those attempting to list companies with hidden issues, thereby improving the quality of listed companies from the outset. Thanks.