All six sessions of Sci-Tech Innovation Board seminar series
All of the six sessions of the 2019 Deloitte China national seminar series on Sci-Tech Innovation Board (the board) listings were held to pack houses over the last three weeks. After extensive planning, the National Public Offering Group (National POG) organized this seminar series in major cities across China. Every seat at all of the seminars was taken and the event received tremendous support from corporate representatives. Many delegates even indicated in open discussions at the seminars the interest in, and plans of the companies they represent to go public. The first session in Shanghai has huge strategic implications. On one hand, it represents Deloitte China's response to the needs of sci-tech innovation companies in the Eastern China region to go public on the board at the Shanghai Stock Exchange. On the other hand, it demonstrates the organization's support for the "Sci-Tech Innovation Board + registration-based system" concept proposed by President Xi, as well as the board's status as one of the priority projects of the Shanghai Municipal Government.
The founding of the board is an important breakthrough and innovation in China's capital market. With the goal of providing more support from the capital market to boost the development of many companies in the hi- and new technology sectors, as well as strategic emerging industries, the National POG of Deloitte China held this seminar series in six major cities across the country (Shanghai, Suzhou, Shenzhen, Wuhan, Beijing and Chengdu), starting from 11 March 2019. These sectors are shortlisted in the country's strategic development plan.
Over 100 corporate representatives attended the seminar in Shanghai on 11 March.
Jerry Yuan, deputy leader of Audit & Assurance (A&A) in the Eastern China region of Deloitte China, delivered the opening remarks at the seminar, introducing the background to the board's establishment and the importance of the board to China's capital market and economy.
During the plenary sessions that followed, Wang Dong, executive director of the Investment Banking Committee of CITIC Securities introduced the key breakthroughs in the listing regime of the new board. These include allowing red-chips to list through China Depository Receipts (CDRs) and the listing of businesses with different voting rights structures, as well as the relaxed industry competition and related-party transaction criteria in the review mechanism. As the new board introduces market capitalization as one of the listing requirements, a new concept to the market, Yang Yin, senior vice president in the Equity Capital Market Department of CITIC Securities provided a detailed account of the board's initial public offering (IPO) pricing mechanism to help those intending to list on the board better understand the factors and characteristics that would affect the pricing and offering mechanisms.
Allan Zhu, managing director of YF Capital, touched on the board's listing requirements after detailing performance of other major Mainland Chinese capital markets. He also highlighted the differences in listing requirements and post-IPO market performance on the New York Stock Exchange and NASDAQ in the U.S. Alex Liu, Global Law Office partner, analysed the paths to list on the board and key matters of concern for sci-tech and innovative companies related to the special structures they frequently use. After these presentations, Jonathan Zhao, China A-Share Capital Market partner for the Eastern China region of the National POG at Deloitte China, focused on the financial aspects and detailed issues, including share-based payments, accounting treatments of research and development expenses, goodwill and revenue recognition, as well as other matters companies need to take note of.
Towards the later part of the seminar, Stephen Hu, China A-Share Capital Market partner for the Eastern China region of the National POG of Deloitte China, hosted a Q&A session and raised questions to keynote speakers, Anthony Wu, China A-Share Capital Market leader in the National POG of Deloitte China, and Lu Qiang, Deloitte China Tax & Legal (T&L) partner. The questions covered a wide range of issues from pre-listing preparations and the selection of strategic investors to regulatory compliance. Many delegates asked the speakers questions based on the potential circumstances of their own businesses. These were all addressed from the perspectives of IPO sponsor, investor, lawyer and accountant.
Anthony Wu made the closing remarks at the seminar in Shanghai.
Altogether, more than 500 guests attended the other five seminars held so far—in Suzhou on 12 March, Shenzhen on 13 March, Wuhan on 15 March, Beijing on 21 March and Chengdu on 25 March. Senior representatives from the Financial Management & Service Bureau of Suzhou Industrial Park, CITIC Securities, Essence Securities, CICC, Oriza Horizongo, Tiantu Capital, Fortune Capital, Chengdu Chuanshang Xingye Equity Investment Fund Management, Zhong Lun Law Firm, King & Wood Mallesons and JunZeJun Law Offices joined listing experts from the China A-Share Capital Market team under the National POG, as well as partners from A&A and T&L, to discuss various issues technology and innovation companies will face when preparing for a listing on the board. Many participants found the hot topics such as the listing requirements of the board, valuation methodologies, sponsor selection, listing arrangements for the first or first few batches of issuers, and the impact of recent new requirements that offshore Chinese company listing candidates have solid business operations in the tax jurisdictions where they are registered very useful and practical. These issues were frequently raised during the panel discussions and were analysed from different perspectives.