CSRC reports on the on-site inspection of first-time issuers in 2025.

On February 6th, the China Securities Regulatory Commission (CSRC) reported on the on-site inspections of 2025 first-time issuers. Throughout the year, the CSRC completed inspections of 16 randomly selected companies and 4 problem-oriented companies, including 8 main board companies, 9 science and technology innovation board companies, and 3 growth enterprise board companies. The quality of new application filings by companies has further improved. By the end of 2025, none of the 16 randomly selected companies had withdrawn their applications for listing, with 7 of them having been approved by the stock exchange listing committee. Market participants have a clearer understanding of the on-site inspections, and the practice of immediately canceling applications after inspection has fundamentally reversed market irregularities. In terms of inspection findings and actions taken: 1. Two companies were found to be involved in significant violations of information disclosure regulations. For example, they were suspected of artificially inflating operating income by fabricating business operations without commercial substance or recognizing revenue before meeting acceptance criteria, and the inflated amounts were significant. The regulatory authorities have initiated investigations into these cases and will hold the issuers and intermediaries strictly accountable if the violations are confirmed. 2. Six companies were found to have deficiencies in information disclosure quality, such as using personal bank cards to pay expenses, making adjustments to ERP system account books without approval, inappropriate accounting treatment of significant events, inaccurate timing of revenue recognition, and omissions in disclosing controlling shareholders or important related parties. Based on the nature and severity of the issues, the regulatory authorities criticized two companies whose disclosure deficiencies affected the assessment of their listing conditions, issued warnings to four companies whose disclosure deficiencies affected the general assessment, and took corresponding measures against intermediaries based on their quality of practice. 3. Twelve companies were found to have non-compliance issues in information disclosure standards, such as inappropriate consolidation of financial statements, inaccurate timing of capitalization of construction in progress, lack of careful estimation of asset depreciation periods, and inaccurate disclosure of labor dispatch situations. These deficiencies did not affect the assessment, and the regulatory authorities have urged the issuers and intermediaries to rectify and standardize these practices. In the next steps, the CSRC will continue to conduct on-site inspections with a focus on risk orientation, highlighting key areas, and implementing classification-based actions. With an objective and realistic approach, the CSRC aims to improve the quality of application filings by prospective IPO companies, enhance market participants' satisfaction, and protect investors' rights and interests. This article is excerpted from the "CSRC Official Website"Translated and edited by GMTEight: Huang Xiaodong.