Yesterday, several media news announced that millet was the fastest in June 7th to issue CDR to the China Securities Regulatory Commission to apply for the China Securities Regulatory Commission, is expected to become the first CDR enterprise, the prospectus will be released recently. Yesterday, people familiar with the matter confirmed the news to the Beijing News reporters. Indeed, millet has submitted the CDR application to the SFC.
No longer applicable to the conditions of the issue of profit
The full name of CDR is China depository receipt. In short, CDR is a credential for holding shares. The industry generally believes that the implementation of CDR can achieve the return of A shares to offshore listed companies without changing the existing legal framework.
From June 7th, eligible innovative enterprises can deliver CDR distribution materials to the SFC. With regard to the way of issuing and listing of innovative pilot enterprises, the heads of the relevant departments of the SFC say that the red chip enterprises in accordance with the pilot conditions can choose to be listed in the domestic market by issuing CDR; and the stock issue can also be selected in accordance with the conditions of the stock issue. Domestic enterprises that meet the pilot requirements can be directly IPO in the domestic market.
The published "management measures" and other documents clearly stipulate that the qualified innovation pilot enterprises are no longer applicable to the conditions relating to profit and the non existence of unmade losses. After the recommendation institutions are fully and carefully checked, the innovative enterprises that are to participate in the pilot project, who believe that they are fully in conformity with the pilot standards, the conditions of issuance and the requirements for information disclosure, may be brought into the pilot and the public.DevelopmentApplication of stock or depository receipt.
The standard of the pilot enterprise is higher than the "unicorn"
The documents disclosed by the securities and Futures Commission show that this support for the domestic listing of innovative enterprises has been carried out in a pilot way, and the corresponding entry threshold has been set up. It is worth noting that the number of innovative enterprises that can participate in the pilot now is relatively small, and the threshold for trial is relatively high.
The selection criteria of pilot enterprises stipulated in several opinions include: the red chip enterprise, which has been listed overseas and has a market value of not less than RMB 200 billion yuan; it has not yet been listed abroad, its operating income is not less than 3 billion yuan in the last year, and the valuation is not less than 20 billion yuan, or the income is growing rapidly, and has independent research and development, international Leading technology, red chip enterprises and domestic enterprises, which are relatively competitive in the same industry competition.
"Generally speaking, the pilot enterprises choose the so-called" unicorn "enterprise standard with a threshold higher than the market colloquialism. The director of the SFC's related departments said that the issue of the issue will be strictly controlled and the pilot enterprises should be carefully selected to take full consideration of the situation in the domestic and international markets, to grasp the number and rhythm of the pilot, and to carry out the pilot work smoothly and orderly.
According to media reports, Xiaomi issued the CDR to the China Securities Regulatory Commission in June 7th, which is expected to become the first CDR enterprise, and the prospectus book has been released recently. CITIC Securities believes that there are 5 enterprises that are expected to meet the pilot requirements, namely, Xiaomi, Baidu, Alibaba, Jingdong and NetEase. It is estimated that 5 unicorns will be issued on CDR scale of 136 billion yuan -2200 billion yuan.
Unicorn plate is paid close attention to
Affected by the introduction of the CDR policy rules, A shares and unicorns have been concerned by funds. In the first half of the year, the SFC and the Shanghai and Shenzhen Stock Exchange made clear that they should strengthen their services to the new economic enterprises, and the concept stocks of unicorns were hyped up by the market.
In June 7th, A shares closed, Shanghai index fell 0.18%, closed at 3109 points, Shenzhen index fell 0.49%, closed at 10313 points, gem fell 0.74%, reported 1730 points. The brokerage sector rose 2%, while the late trading rose 0.42%, of which Xingyi securities rose 4% and CITIC Securities rose 1.6%.
The unicorn concept shares were generally rising, and the software showed that the unicorn concept stock was once up 1%, and the rear end fell 0.22%.
Huatai Securities Research Report believes that CDR will increase the diversity of A shares and enrich the capital market product line. For securities companies, it will increase the income of brokerages and investment banking business. With reference to the experience of the United States, the issuing expense of issuing depository receipts is higher than that of ordinary IPO. It is estimated that the annual investment volume of brokerage firms will increase by 6 billion -90 billion yuan, accounting for 2%-3% of the industry's revenue in 2017. Leading securities companies are more benefited. CITIC, GF, merchants, Guotai Junan and Haitong Securities are recommended.
A private institution in Beijing believes that "the concept of unicorn is the same as the other themes of A shares. Investors need to be careful to participate. According to the subject hype, it will often fall for a long time after a rapid rise, and investors need to pay attention to the risk."
Point of view
VIE architecture and AB shares are released
According to the CDR issue and management method, the VIE structure and AB share setup have been approved by the regulatory authorities.
The document said, "there is an agreement control structure for the pilot red chip enterprises that apply for the issuance of shares. The CSRC shall handle the matter in accordance with the law according to the different circumstances of the enterprise.
Protocol control architecture and VIE architecture, many Internet companies have VIE structure in equity settings, which can not meet the requirements of domestic listing. According to people in the industry, through the VIE framework, domestic enterprises can use the "Majia" company to finance foreign investors, while avoiding partial supervision, on the other hand, it is also convenient for enterprises to be listed in the United States and Hongkong.
Previously, as the Internet Co banned foreign investment by the Internet Co, the domestic Internet companies that needed financing in the early years were listed overseas, including NetEase, Baidu, and Baidu.tencentAli, Sina, Sohu and so on. However, enterprises with VIE structure can not be listed in China, and Qihoo 360, storm group and other enterprises are returning to A shares. They have gone through the process of demolishing the VIE structure.
In addition, the AB share setup is no longer a barrier to the issuance of pilot enterprises.
"The management measures for depository certificate" indicates that "there is a difference in the voting rights of shareholders, the control structure of the enterprise agreement or similar special arrangements in the issuance certificate of the pilot red chip enterprise, and the relevant information disclosure regulations should be made in full and detailed disclosure of the relevant information, especially the risk, in the prospectus of the prospectus, such as prospectus. Information on corporate governance, and measures to protect the legitimate rights and interests of investors according to law.
Public information shows that "different rights of the same stock", also known as the two-tier shareholding structure, refers to the common stock structure containing two or more kinds of voting rights in the capital structure. According to the insiders, the different rights of the same shares are "AB share structure", and the B shares are generally held by the management, while the management is generally the original shareholders and their teams, and the class A shares are generally held by the peripheral shareholders. Such shareholders are optimistic about the company's future. So they are willing to sacrifice certain voting rights as stock market.
This structure is conducive to the direct use of equity financing for the growth enterprises, at the same time, it can also avoid overdilution of equity, resulting in the loss of the corporate discourse right by the founding team and ensuring the stable development of such growth enterprises. Similar to Baidu, Ali, Jingdong and so on are "AB share structure". Internationally, at present, the US NASDAQ can achieve "different rights with shares" and is the preferred place for AB share companies to list.
How does CDR price and deal?
According to the Securities Regulatory Commission, the investors' participation in CDR transactions will be compared with the A trading mode, which is conducive to ensuring the basic stability of the trading system. The trading habits of the investors do not change significantly, the technical system needs no big adjustment, and the transaction is smooth and the bottom line that does not have systemic risk is strictly observed.
Previously, the Shanghai and Shenzhen Stock Exchange and China settlement issued a notice to all securities companies to start the CDR simulation test, informing that the basic design ideas of CDR are mainly referred to A shares.
This also shows that the process of CDR trading by qualified investors is not significantly different from that of trading ordinary A shares.
At present, the SSRC does not stipulate the investor threshold to participate in the pilot project, and only requests the investor's appropriateness from the perspective of investor protection, and the specific exchanges are clearly defined in the business rules.
It is worth noting that the pricing of the CDR will be subject to institutional enquiry and no more than 23 times price earnings ratio.
The CSRC disclosed that the positive role of professional institutional investors will be given full play to the influence of professional institutional investors in the process of pricing in the inquiry process of pilot innovation enterprises.
The regulatory authorities will require the issuer and its main underwriter to design the distribution scheme scientifically according to the respective situation of the enterprise, establish a reasonable and effective incentive and risk restraint mechanism for the institutional investors to participate in the inquiry, and promote the active participation, careful study and careful quotation of the professional institutional investors.
The South Fund believes that, from the overseas experience, the CDR issue pricing is expected to have two kinds: the first kind is similar to the fixed increase, that is, to add a part of the shares, which is equivalent to a discount on the original stock price; the second is equivalent to the old stock transfer, which is negotiated and priced, and does not necessarily refer to the current stock exchange price.
At the issue price, according to the new securities issuance and underwriting management method (2018 solicitation draft), including the CDR issue, the pricing of IPO will be mainly based on institutional inquiry, which is not expected to be similar to the price of the past two years.
Previously, the Shanghai and Shenzhen Stock Exchange and China settlement issued a notice to all securities companies to start the CDR simulation test, informing that the basic design ideas of CDR are mainly referred to A shares. This also shows that the process of CDR trading by qualified investors is not significantly different from that of trading ordinary A shares.
Why the new Advisory Committee?
The SFC said that in order to improve the capability and level of the SFC's scientific decision-making, the SFC set up an Advisory Committee on scientific and technological innovation (hereinafter referred to as the Advisory Committee). The newly established advisory committee mainly serves as a consultative recommendation. The document said that the Advisory Committee, a policy advisory body of the CSRC, is responsible for providing professional advice and policy recommendations to the SFC, the issuance and audit committee, the M & A Review Committee, the Shanghai and Shenzhen Stock Exchange, and the national share transfer company.
The members of the Advisory Committee are mainly composed of authoritative experts, well-known entrepreneurs and senior investment experts. They need to engage in high-tech industries and strategic emerging industries. One task of the committee is to provide advice on the relevant situations of enterprises applying for the issuance of stocks or depository receipts in China.
According to the disclosure of the implementation measures for the issuing of stock or depository vouchers and Listing Supervision in a pilot innovation enterprise, the pilot enterprises may be red chip enterprises listed abroad, or enterprises that have not yet been listed abroad (including red chip enterprises and domestic registered enterprises).
The Advisory Committee needs to provide advice to the SFC on pilot enterprises. According to the sources of the regulatory authorities, the above committee is not in conflict with the functions of the current issuance Committee.
Who is responsible for the due diligence?
In the CDR rules, the responsibility of sponsoring agencies has increased. The new regulations stipulate that the sponsor organizations need to increase the due diligence of the special circumstances and related risks of the innovative enterprises. It is mainly divided into 5 aspects, one is the corporate governance, and the recommendation of the sponsor to the agreement control structure, the different voting rights structure, the voting agreement or the special security of other companies. The two is the issue of depository voucher, which increases the satisfaction of the sponsor on the arrangement of depository trusteeship and the protection arrangement for the holder of the depository certificate, the security arrangement of the depositary on the basic securities and its related property, the qualification of the trustee and other related items related to the issuance of the depository certificate.
In addition, risk factors, investor protection and overseas violations were also included in due diligence.
According to the legal practitioners, if the sponsor is not responsible for the sponsor and financial advisor, the Commission will be investigated for the corresponding responsibility by the SFC and may face a huge fine.
Who will be the first batch of pilot enterprises?
The Beijing News reporter found that 7 of the listed companies in the US and Hong Kong stock accord with the requirements of the CDR pilot 200 billion yuan.
There are four stocks listed in the US, namely Alibaba, Baidu, Jingdong and NetEase. Hong Kong shares are listed by Tencent holdings, China Mobile and China Telecom.
Yesterday, the Tencent said it was actively studying the details. The Alibaba says it will come back as long as conditions are allowed. The Jingdong said it would be willing to return. Baidu said there was no new information to be disclosed.
How does CDR supervise and write?
According to the SFC disclosure, the pilot enterprises issue the depository receipts, and the relevant listing requirements are implemented in accordance with the relevant provisions of the proposed stock exchange. Its post listing regulation is no exception as existing regulatory documents.
The CSRC requires that the pilot red chip enterprises should not sell stock shares at the same time in the open territory of China, or sell them at the same time to issue depository certificates corresponding to the stock based stock. In addition, after the listing of the pilot red chip enterprises in China, the depository receipts issued in China and the stock basic stocks issued abroad will not be arranged in principle.
In the area of reduction, the shareholders of a pilot enterprise shall abide by the provisions of the domestic laws, administrative regulations, the regulations of the China Securities Regulatory Commission and the rules of the business of the stock exchange on the stock exchange.
In order to fully protect the legitimate rights of domestic investors, the disclosure of financial information in Hong chip enterprises should follow the principle of "high is not low" and for the overseas financial report. The information disclosed should also be disclosed in its domestic listing financial statements.
Will it squeeze small and medium-sized enterprises to go on the market?
The market is concerned that the listing and listing of CDR enterprises may occupy the opportunities and resources of other small and medium-sized innovative enterprises.
In view of the market concerns, the relevant departments of the Securities Regulatory Commission said that in order to stabilize the market expectations, the pilot will select enterprises strictly according to standards and procedures, grasp the number of enterprises and the scale of financing, and strictly enforce the entry clearance according to law, and promote the issuing of stock and CDR pilot of innovative enterprises and arrange the timing and rhythm of issuance. Enterprises that fail to be included in innovative pilot projects have always been smooth in their normal IPO channels. Those companies that are in good condition, operate in a standardized manner and meet the conditions of issuance can submit IPO applications according to the existing procedures and check normally.
A large brokerage in Beijing believes that the issuance of CDR will not affect the issuance of new shares. With the gradual increase of pilot enterprises, the high quality enterprises in the new economy will have more opportunities to enter the A stock market.
How do individual investors participate?
In addition to normal market transactions, ordinary investors have long been able to get involved in the long line of "unicorn" CDR investment. The CDR fund can be "renewed" in advance, and the fund contract has been published.
In June 6th, the CSRC official website disclosed that the hybrid securities investment fund (LOF) was applied to the south, Yi Fangda, Jiashan, Huaxia, Huihua Fu and the 6 fund companies in the 3 year closed operation strategy.
Reporters call the above 6 fund companies customer service hotline for consultation. Among them, the southern fund customer service hotline shows that ordinary investors can purchase from June 11th to June 15th. Yi Fonda fund customer service hotline, investors can already online online purchase. Including Jiashi, Huijia rich, investment investment, China fund official network, have updated the "3 year closed operation strategic distribution flexible allocation of mixed securities investment fund" fund contract.
How to protect the interests of investors?
In order to effectively protect the legitimate rights and interests of investors, the SFC introduced multi-directional investor protection measures.
First, under the circumstances of the infringement of the legitimate rights and interests of investors, the pilot enterprises should ensure that domestic investors receive compensation equivalent to those of overseas investors.
The two is to strengthen the restraints of the controlling shareholders, the actual controllers, the directors and the senior managers of the unprofitable pilot enterprises, and strengthen their sense of responsibility for the investors. Before the pilot enterprise realizes the profit, the above personnel shall not reduce the stock of the stock before the market.
Three, the issue of depository receipts should ensure that the holders' rights and interests of the depository receipt holders are equivalent to those of the overseas basic stock holders.
The four is to ensure the security of the base property of the depository voucher, which requires the depositary and the trustee to effectively isolate the base property of the depository certificate and its own property, and shall not bring the underlying property of the depository certificate into its own property, and shall not violate the obligations of the trustee to occupy the base property of the depository certificate.
The five requirement is that the depository agreement expressly stipulate that disputes arising from depository receipts shall be governed by Chinese courts.