CSRC Introduces New On-site Inspection Rules on IPO Applications, Adding “Unannounced Inspection” Mechanism

On March 15, 2024, the China Securities Regulatory Commission (CSRC) released the revised Provisions on On-site Inspection of IPO Applicants (the “Provisions”), which will take effect from the date of release.

The latest revision has merged the existing internal operational specifications to form five chapters, including General Provisions, Identification of Companies for the Inspection, Organization and Implementation, Supervision and Administration, and Supplementary Provisions, with a total of 39 articles. The revised Provisions stress the principle that “responsibility starts with the IPO application”, stipulating that in the inspection process, those that withdraw their IPO applications shall be thoroughly investigated and that the withdrawal of IPO applications does not affect the implementation of inspection work, nor does it affect the handling of problems found during inspections in accordance with laws and regulations. An “unannounced inspection” mechanism has been added, which allows inspection agencies to directly carry out, subject to the approval of their institutional heads, inspections without notifying the objects of inspection in advance when major emergency matters arise or when there is clear evidence indicating that such advance notification may affect the inspection effect.