The Provisions of the State Council on Regulating Intermediaries to Provide Services for Public Offering of Shares by Intermediaries (hereinafter referred to as the "Regulations") issued by the State Council came into effect on February 15.

In the new regulations, "decoupling intermediary fees from listing results" and "canceling local government listing incentives" have become the focus of market attention. Some industry insiders have analyzed that curbing result-oriented charging behavior can reduce the interest bundling between intermediaries and issuers, and help enhance the independence and objectivity of intermediaries. On the other hand, local governments and enterprises should be guided to treat listing more rationally.

New regulations promulgated: standardize the fees charged by intermediaries and improve the quality of the capital market

The official document of the "Provisions" was released on January 15 this year and clearly came into force on February 15. As early as August 2024, when the draft of the "Provisions" was released, it attracted widespread attention in the industry. One of the highlights of the new rules is that when an intermediary provides services for a company's public offering of shares, its fees cannot be linked to the listing results. This requirement is aimed at enhancing the independence of intermediaries and has been highly praised by industry insiders.

A new standard for intermediary fees

Specifically, the "Provisions" put forward new charging standards for the sponsorship business and underwriting business of securities companies:

Sponsorship business: When a securities company engages in sponsorship business, it can charge service fees in stages according to the progress of the work, but the amount of the fee shall not be conditional on the results of the public offering and listing of shares.

Underwriting business: When engaging in underwriting business, it shall comply with the regulations of the securities regulatory authority of the State Council, comprehensively evaluate the cost of the project and other factors to collect service fees, and shall not increase the proportion of fees according to the scale of the issuance.

The new regulations specifically emphasize the requirement that the underwriting business of securities firms shall not be subject to an increase in the proportion of fees charged according to the size of the issuance, aiming to prevent securities firms from over-packaging or promoting the listing of large-scale but low-quality projects in pursuit of high underwriting fees. This will help to encourage securities firms to pay more attention to the overall quality and sustainability of the project, so that financing can be truly implemented in business development, and the allocation efficiency of the capital market will be improved. At the same time, it also provides a more level playing field for small- and medium-sized enterprises with strong innovation capabilities.

Enhance the independence of intermediaries

The direct link between the divestment service fee and the IPO result ensures that intermediaries can obtain corresponding income protection after their labor, and on the other hand, it also prompts securities firms to practice prudently and pay more attention to the intrinsic value of the enterprise and its long-term operating ability. The new regulations will play an important role in promoting fair competition, maintaining normal price order, and improving the overall quality of the capital market.

For accounting firms and law firms, the Provisions also have specific requirements:

Accounting firms: When performing audit business, service fees can be charged in stages according to the progress of the work, and the same fees cannot be linked to the listing results.

Law firms: Law firms shall charge uniform fees, and comply with the relevant provisions of the State Council's judicial administration and other departments on fees for lawyers' services.

监管部门的态度

相关监管部门曾表示，实践中，绝大部分中介机构在执业过程中能够规范收费。然而，对于少数不符合《规定》要求的收费行为，中介机构与发行人应及时改正，否则将承担相应的法律责任。

|禁止“合同外收费”“上市奖励”“临时加价”

除了明确各类中介机构收费结构的总体要求外，《规定》还对中介机构提出了多项禁止性规定，以防止任何形式的变相收费情况出现。以下是具体的要求和措施：

禁止性规定

《规定》明确指出，中介机构及其从业人员不得存在以下行为：

在合同约定之外收取费用，或以临时加价等方式变相提高收费标准；

通过签订补充协议、另行约定等手段规避监管收取服务费用，或违反规定在不同业务之间调节收取服务费用；

违反规定入股，或通过获取股票公开发行上市奖励费等方式谋取不正当利益；

其他违反国家规定的收费或变相收费行为。

These prohibitions are intended to put an end to the "unspoken rules" in the industry in the past, such as the payment of IPO "listing incentives" to intermediaries after an issuer has successfully listed. This practice seriously affects the independence and objectivity of intermediaries.

Regulatory Measures and Penalties

In order to strictly supervise, the "Provisions" clarify the regulatory requirements and corresponding penalties for intermediaries and their employees:

For intermediaries: If the regulations are violated, the securities regulatory authorities, finance, judicial administration, market supervision and administration departments will order corrections and give warnings in accordance with the division of responsibilities. At the same time, the illegal gains shall be confiscated, and a fine of not less than 1 time but not more than 10 times the illegal gains may be imposed; If there are no illegal gains or the illegal gains are less than 100,000 yuan, a fine of not less than 100,000 yuan but not more than 1 million yuan may be imposed concurrently.

For the person in charge who is directly responsible and other persons who are directly responsible: a warning will also be given, and a fine of not less than 100,000 yuan but not more than 1 million yuan may be imposed. Employees with serious circumstances will also face a penalty of suspension from engaging in relevant business for one month to one year.

Constraints on Issuers

The Provisions not only bind intermediaries, but also impose strict regulatory requirements on issuers:

If the issuer violates the rules, the securities regulatory authority will order it to make corrections, give a warning, and may impose a fine of not less than 100,000 yuan but not more than 1 million yuan;

The directly responsible managers and other directly responsible personnel shall be given warnings and may be fined between 100,000 and 1,000,000 RMB;

If the controlling shareholder or actual controller of the issuer organizes or instigates the above-mentioned illegal acts, or conceals relevant matters resulting in the occurrence of the above-mentioned circumstances, it will also be fined not less than 100,000 yuan but not more than 1 million yuan; The directly responsible managers and other directly responsible personnel shall be given warnings and fined between 100,000 and 1,000,000 RMB.

Local government listing incentives were suspended

Another highlight of the Provisions is that local people's governments at all levels are expressly prohibited from giving issuers or intermediaries any form of incentives on the condition of the results of public offerings and listings. This measure aims to further regulate the market order and create a more market-oriented and law-based business environment.

Historical background of local government incentive policies

In the past, in order to encourage local enterprises to speed up the pace of listing, local governments have generally introduced listing support policies, giving incentives or subsidies to successful listed enterprises and related intermediaries. Through these incentives, local governments hope to increase the probability of successful listing of local enterprises, and in this way, produce a demonstration effect that drives regional economic development.

However, this practice also comes with some drawbacks:

Vicious competition between regions: Incentive competition between local governments can lead to increased fiscal burdens.

Distorted view of performance: Focusing too much on the quantity of listings rather than the quality of listings may lead to a biased view of performance.

Misalignment of intermediaries' roles: High rewards may induce intermediaries to pursue short-term interests and deviate from their role as "gatekeepers".

The specific requirements of the new regulations

In view of the above problems, the "Provisions" clearly stipulate that from the date of implementation, local governments shall no longer give incentives to issuers or intermediaries on the condition of the results of public offering and listing of shares. Rewards for non-compliance must be recovered. However, according to the relevant laws and regulations, the incentives already given by the government before the implementation of the "Provisions" will not be recovered.

The implementation of the new regulations will significantly change the role of local governments in the capital market, reduce their direct intervention in the listing of enterprises, and guide the government and enterprises to treat the listing process more rationally. Specifically:

Reduced government intervention: The new rules reduce the direct intervention of local governments in the listing of enterprises, which helps to build a level playing field.

Strengthening the independence of intermediaries: For intermediaries such as brokers, this reduces potential conflicts of interest with local governments and enhances their professionalism and credibility as independent third parties.

Focus on serving enterprises: Intermediaries can focus more on providing corresponding capital market financing services for enterprises at different stages of development to help the long-term healthy development of enterprises.