China Securities Association Announces New IPO Offline Investor Eligibility Criteria Private Placement Needs to Reach 1 Billion Dollars

Zhitongcaijing · 10/18 12:17

Zhitong Finance App learned that on October 18, the China Securities Association issued a notice on the “Decision on Amending the 'Rules for the Administration of Offline Investors in the Initial Public Offering of Securities'”. The notice suggests that institutional investors who register as offline investors shall meet the following basic conditions: they shall be general institutional investors that have been established in accordance with law and have completed registration procedures and specialize in securities investment as stipulated in Article 4 of these Rules. They have been trading securities for at least two years and have rich experience in securities trading in the Shanghai and Shenzhen markets. Among them, the total size of private equity funds managed by private equity investment fund managers should be at least 1 billion yuan (inclusive) in the last two quarters, and at least one of the private equity investment funds managed in the past three years has existed for at least two years (inclusive).

The notice also pointed out that the self-operated investment account registration target of an offline investor should have certain investment strength, and the total market value of unrestricted stocks and unrestricted depository certificates purchased from the secondary markets of the Shanghai Stock Exchange and Shenzhen Stock Exchange should not be less than 60 million yuan as of the end of the most recent month. In addition to this, the total market value of unrestricted stocks and unrestricted depository certificates purchased from the Science and Technology Innovation Board should not be less than 6 million yuan by the end of the most recent month when registering business rights on the Science and Technology Innovation Board.

Corresponsibly, he has been engaged in securities investment business for more than five years (inclusive), and has rich experience in securities trading in the Shanghai and Shenzhen markets. Of the unrestricted stocks and unrestricted depository certificates purchased from the secondary securities market held in the last three years, at least one has been held continuously for more than 180 days (inclusive).

Securities companies set specific conditions for recommending offline investors and placement targets, which should include but are not limited to conditions such as investment transaction experience, credit history, pricing ability, compliance risk control ability, risk tolerance, investment strength or asset management ability, investor education and training time limit, investment strategy, and product nature. The securities company shall conduct preliminary training for investors, inspect the training situation, and recommend and register those that have passed the inspection and meet the registration conditions set by the Association and the securities company.

The original text is as follows:

Notice on Issuing the “Decision on Amending the 'Rules for the Administration of Offline Investors in Initial Public Offering of Securities'”

Various online investors and securities companies:

In order to cooperate in comprehensively deepening capital market reform, thoroughly implement the spirit of the Third Plenary Session of the 20th CPC Central Committee, the Central Financial Work Conference, the deployment of the new “Nine Rules” and the relevant requirements of the China Securities Regulatory Commission (hereinafter referred to as the China Securities Regulatory Commission) “Eight Rules for the Science and Technology Innovation Board”, further strengthen the self-regulatory management of offline investors and maintain a good issuance order in the securities market, in accordance with the “Measures for the Administration of Securities Issuance and Underwriting” and other relevant laws, regulations and regulations, the China Securities Association (hereinafter referred to as the Association) formulated “On the Revision of the Initial Public Offering” The “Decision” (hereinafter referred to as the “Amendment Decision”) (hereinafter referred to as the “Amendment Decision”) was passed by a vote at the 26th meeting of the 7th Board of Directors of the Association, and the report was completed with the China Securities Regulatory Commission.

The “Amendment Decision” is now published and will take effect from the date of publication.

Decision to amend the “Rules for the Administration of Offline Investors in Initial Public Offering of Securities”

1. Merge sections 5 and 6 as Article 5, and amend subparagraphs 1 and 2 to read: “(1) shall be professional institutional investors that have obtained administrative permits in accordance with law as stipulated in Article 4 of these Rules; private equity investment fund managers established by law and completed registration procedures with the China Securities Investment Fund Industry Association; general institutional investors who have been in securities trading for more than two years (inclusive), and have extensive trading experience in the Shanghai and Shenzhen stock markets. Among them, the total size of private equity funds managed by private equity investment fund managers should be at least 1 billion yuan (inclusive) in the last two quarters, and at least one of the private equity investment funds managed in the past three years had a lifespan of at least two years (inclusive);

(2) Have a good credit history and ability to continue to operate; have not been subject to criminal punishment, administrative supervision measures, or disciplinary action by relevant supervisory authorities for major violations of laws and regulations in the last 12 months; not taken written self-regulatory management measures more than three times (inclusive) by relevant self-regulatory organizations in the last 36 months; not included in the list of untrustworthy executees, the list of business anomalies, or the list of serious violations of trust in market supervision and management. There have been no major business risk incidents in the last 12 months, no major business risk incidents have been ordered to be shut down and rectified in accordance with law, or designated other institutions Risk management measures such as trusteeship, takeover, administrative restructuring;”

Add one item as item 8: “(8) Establish and improve internal accountability mechanisms and remuneration assessment mechanisms for initial securities, clarify matters such as responsibility determination and accountability of relevant business personnel, and determine personnel remuneration standards by comprehensively considering various factors such as professional competency, quality of practice, compliance, and business income of researchers and investment decision makers;”

Accordingly, Article 7 was changed to Article 6, and subparagraphs 2 and 3 were amended to read: “(2) Engage in securities investment business for at least five years (inclusive), and have rich experience in securities trading in the Shanghai and Shenzhen markets. Of the unrestricted stocks and unrestricted depository certificates purchased from the secondary securities market held in the last three years, at least one has been held continuously for 180 days (inclusive) or more;

(3) Have a good credit history, have not been criminally punished in the last 12 months, have not been subject to administrative punishment, administrative supervision measures, or disciplinary action by relevant supervisory authorities for major violations of law and regulations, have not been taken by the relevant self-regulatory organization in writing more than three times (inclusive) in the last 36 months, and have not been included in the list of untrustworthy executees in the last 12 months;”

2. Amend Article 8 to Article 7 and amend it to read: “Offline investors should have certain investment strength, and the total market value of unrestricted stocks and unrestricted depository certificates purchased from the secondary markets of the Shanghai Stock Exchange and Shenzhen Stock Exchange should not be less than 60 million yuan as of the end of the most recent month. In addition to this, the total market value of unrestricted stocks and unrestricted depository certificates purchased from the Science and Technology Innovation Board should not be less than 6 million yuan by the end of the most recent month when registering business rights on the Science and Technology Innovation Board.”

Accordingly, Article 9 was changed to Article 8, and item 3 was amended to read: “(3) The total market value of unrestricted stocks and unrestricted depository certificates purchased from the secondary markets of the Shanghai Stock Exchange and the Shenzhen Stock Exchange shall not be less than 60 million yuan as of the end of the most recent month. Register for the Science and Technology Innovation Board business license. The total market value of unrestricted stocks and unrestricted depository certificates purchased from the Science and Technology Innovation Board should not be less than 6 million yuan as of the end of the most recent month. Public funds, social security funds, pensions, annuity funds, insurance funds, and placement targets applied for registration by qualified overseas investors are excluded;”

3. Amend Article 12 to Article 11 and amend it to read: “In principle, the Association completes the registration process within ten working days from the date the offline investor registration application materials are ready. If the registration application materials of the applicant for an offline investor are incomplete or do not meet the requirements, they shall make corrections or provide explanations in accordance with the requirements of the Association; if they do not meet the registration requirements, the Association shall notify them in writing of the reasons for not registering; if they meet the registration conditions, the Association shall publicize the basic information of the offline investor through the official website.

The time for offline investors to submit corrective materials and explanatory documents is not included in the registration processing time limit.”

4. Amend Article 14 to read: “Where the following important matters occur to an offline investor or a sales target managed by an offline investor, the offline investor shall report to the Association on their own or through a securities company recommending their registration within ten working days from the date of occurrence:

(1) Offline investors are dissolved, deregistered, revoked, declared bankrupt or died in accordance with law;

(2) An offline investor has experienced a major business risk incident, and risk management measures such as ordering business closure and rectification, designating other institutions for trusteeship, takeover, and administrative restructuring are taken in accordance with law;

(3) Offline investors are criminally punished, or are subject to administrative penalties, administrative supervision measures by relevant supervisory authorities, or disciplinary or written self-regulatory management measures taken by relevant self-regulatory organizations due to major violations of laws and regulations in equity investment trading business or asset management business, or included in the list of untrustworthy executees, a list of abnormal operations, or a list of serious violations of trust in market supervision and management;

(4) The placement target managed by the offline investor has been terminated or liquidated;

(5) The product types, investment targets, investment strategies, investment research capabilities, etc. of the placement targets managed by offline investors do not meet the requirements of the initial securities offline inquiry and placement business;

(6) The offline investor or the placement target managed by the offline investor did not accept, did not carry out an appropriateness self-inspection, or according to the requirements of the Association when carrying out the suitability self-inspection, the offline investor's asset strength or the asset size of the placement target managed by the offline investor did not meet the basic registration conditions stipulated by the Association;

(7) If an offline investor has not registered an account for placement within 12 months from the date of completion of registration, or if all placement targets managed by the offline investor are suspended or dormant, etc., except where the period for implementing self-regulatory measures has not expired;

(8) Other important matters affecting offline investors or placements that continue to meet registration requirements.

If an offline investor has subparagraphs (1), (4), (5), or (7) of the preceding paragraph, or where item (6) occurs during two consecutive self-inspection periods, the Association shall take measures such as suspending or cancelling the account of the offline investor or placement target; if there are situations in subparagraphs (2), (3), or (8) of the preceding paragraph, the Association may take measures such as not registering, suspending, or canceling the account of the offline investor or sales target account if the circumstances of the new registration application do not meet the requirements.”

Accordingly, Article 44 was changed to Article 46 and amended to read: “Securities companies shall carry out a self-inspection of the appropriateness of offline investors at least every six months to form a self-inspection report. If a securities company discovers that the recommended offline investor or the placement target managed by the securities company has a situation stipulated in Article 14 of these Rules or other circumstances determined by the securities company that does not meet the requirements for proper management, it shall issue a written reminder to the offline investor within ten working days from the date of discovery, informing them that they have not continuously complied with the appropriate management requirements for offline investors and proposed subsequent measures, and report to the Association and put forward clear treatment opinions.”

5. Amend Article 15 to read: “Where an offline investor or a sales target managed by an offline investor is prohibited from participating in the offline inquiry and placement business and is included in the restricted list, it will automatically be suspended after the expiration of the period.

Where an offline investor or placement target managed by an offline investor has been suspended, those applying to re-participate in the initial securities online inquiry and placement business shall submit a registration application to the Association in accordance with the registration procedure and meet the registration conditions for the offline investor or placement target.”

6. Amend Article 16 to Article 13, and add a paragraph as the third paragraph: “Placement targets designated by offline investors participating in the online inquiry and placement business of the Science and Technology Innovation Board shall, in addition to meeting the market value requirements stipulated in the preceding paragraph, also comply with the relevant regulations of the Shanghai Stock Exchange.”

7. Add an article as Article 17: “The Association shall strengthen the management of offline investor information and related data. No organization or individual shall disclose or divulge offline investor information and related data without authorization, and shall not unlawfully use offline investor information and related data data known to them for commercial purposes.

If any of the following circumstances are met, the Association provides an inquiry service:

(1) Offline investors inquire about information or data relating to themselves or the placement targets they manage;

(2) Securities companies need to be queried and used in order to perform offline investor management and inspection duties;

(3) Discipline inspection and supervision organs, people's courts, people's procuratorates, public security organs, and the China Securities Regulatory Commission carry out inquiries and evidence collection in accordance with statutory conditions and procedures;

(4) Stock exchanges require relevant information or data to perform their duties in accordance with laws, administrative regulations or regulatory regulations;

(5) Other situations where relevant information or data is really necessary to perform duties in accordance with law.”

8. Amend Article 18 (3) Amend Article 18 (3) Amend a complete compliance management system to conduct compliance reviews on participation in the online inquiry and placement business of initial securities, review whether there is a relationship with the project issuer or lead underwriter, whether quotation and purchasing behavior are in compliance with the relevant rules, and conduct regular or irregular compliance checks on the objectivity and prudential back-verification of quotations to ensure that business is carried out lawfully and in compliance;”

9. Amend Article 22 to read: “Investors from offline professional institutions who register themselves shall carry out an appropriateness self-inspection every six months to promptly update the registration information of offline investors and their managed placement targets. If you find that you or your managed placements do not meet the registration requirements stipulated in these Rules, you should promptly report to the Association and apply for account suspension or cancellation.”

10. Add an article as Article 29: “Offline investors shall rationally and prudently use investment value research reports provided by the lead underwriters of initial securities projects, and shall not disclose or divulge investment value research reports or their contents in any form, or publish untrue or inappropriate statements relating to offline inquiry and placement services, which adversely affect or have consequences on the offline distribution order.”

11. Amend Article 30 to Article 31 and amend it to read: “Offline investors shall submit the pricing basis and the suggested price or price range given through the stock exchange's offline subscription platform before starting an offline inquiry for an initial securities project. Offline investors who have not submitted a pricing basis, recommended price, or price range are not allowed to participate in the inquiry.

Before submitting a pricing basis, offline institutional investors should complete an internal approval process, and offline individual investors should sign or sign confirmation in writing. As soon as the pricing is submitted, the offline investor is deemed responsible for its authenticity, accuracy, completeness, and independence.”

12. Amend Article 33 to Article 34, and add a paragraph as the second paragraph: “If offline investors have a related relationship or agree on matters such as disposition of joint property or stock investment, etc., they shall ensure that effective quarantine measures are taken to independently carry out offline inquiry and subscription services on the premise of complying with the requirements of relevant laws, regulations and regulatory regulations, and shall not negotiate on matters such as writing the basis for pricing or determining quotation ranges or specific prices. Those who cannot take effective quarantine measures to independently carry out offline inquiry and subscription services shall not participate in offline inquiry and subscription services for the same project.”

13. Add an article as Article 42: “Offline institutional investors shall set up risk performance assessment indicators for initial securities, retrospectively verify the objectivity and prudence of quotations, prevent improper quotations and irregularities, and implement performance compensation deferred payment or refund mechanisms for members of the pricing team in accordance with internal systems and labor contract provisions, through internal approval procedures, and regularly report to the Association.

Offline institutional investors should clearly request that members of the pricing team be reimbursed part or all of their performance pay for the year the irregularity occurred, depending on the severity of the circumstances, in accordance with the provisions of internal systems and labor contracts, and through internal approval procedures, if any of the members of the pricing team are subject to self-regulatory management measures, disciplinary sanctions, administrative supervision measures, market bans, administrative penalties, criminal penalties, etc. relating to the offline inquiry and placement business. If traders make operational mistakes, offline institutional investors will carry out internal accountability.”

14. Amend Article 41 to Article 43, and amend subparagraph 3 to read: “(3) Entrusting others to carry out online inquiry and subscription services for initial securities, or receiving commissions from other offline investors to carry out online inquiry and subscription services for initial securities, except where authorized by an administrative license;”

The fourth item was amended to read: “(4) Disclosing the agency's or one's own valuation pricing methods, valuation pricing parameters, and relevant quotation information, inquiring about, collecting, and disseminating the above information from other offline investors, or negotiating quotations on the above information among offline investors before the inquiry is completed;”

Section 7 was amended to read: “(7) Intentionally lowering or inflating offers for the purpose of “being selected for the blog”, etc.;”

15. Amend Article 42 to Article 44 and amend it to read: “The Association formulates self-regulatory rules for the proper management of offline investors in securities companies, and guides and supervises securities companies to continuously improve the management and service level of offline investors.

Securities companies shall establish an appropriate management system for offline investors in accordance with the requirements of the Association, set clear recommendation standards for offline investors and placement targets, establish review and decision-making mechanisms, daily training mechanisms, and regular review mechanisms to ensure that the selection, determination and adjustment of offline investors and placement targets meet the basic conditions stipulated by the Association and the company's internal rules and procedures.

16. Add an article as Article 52: “In the offline inquiry and placement business of initial securities, securities companies and their staff shall not accept orders from offline investors to write pricing bases or make quotations or subscriptions on their behalf, and shall not divulge investors' quotation information before the offline investor's quotation information is publicly disclosed.”

17. Amend Article 50 to Article 53 to read: “Work measures the Association may take include:

(1) Send a letter of supervisory work;

(ii) interviews;

(3) Request a response;

(4) Request for a statement;

(5) Temporary suspension of offline investor or placement target accounts;

(6) Other work measures.”

18. Add an article as Article 56: “If the applicant for an offline investor conceals important circumstances or provides false information to register an offline investor or placement target, the Association will not accept or register. At the same time, the applicant shall not submit another application for registration within one year.”

19. Amend Article 54 to Article 58 and amend it to read: “If an offline investor experiences a situation as stipulated in Article 43 (1) to (14) of these Rules, the Association shall take the following self-regulatory measures;

If an offline investor experiences the above situation once in a year, the offline investor is included in the offline investor restriction list for six months; if the above situation occurs twice, the offline investor is included in the offline investor restriction list for 12 months; if the above situation occurs three times (inclusive) or more, the offline investor is included in the offline investor restriction list for 36 months.”

20. Merge section 55 and section 56 as section 59 and amend it to read: “Where an offline investor experiences a situation as stipulated in section 43 (15) to (20) of these rules, and has not caused obvious adverse effects or consequences, the Association shall take the following self-regulatory measures:

If an offline investor experiences a situation as stipulated in section 43 (15) to (19) of these rules once within a year, the offline investor shall participate in compliance education and submit a commitment within the specified time; if the above situation occurs twice, the relevant placement target involved by the offline investor shall take self-regulatory measures not to participate in the offline inquiry and placement business for six months; if the above situation occurs three times (inclusive) or more, the relevant placement object involved by the offline investor shall take self-regulatory measures for 12 to 36 months;

If an offline investor occurs within a year, a supervisory work letter is sent to the offline investor requesting that the offline investor make corrections within a limited period of time; if the correction is refused, the relevant placement target involved by the offline investor shall take self-regulatory measures not to participate in the offline inquiry and placement business for six months.

If offline investors fail to participate in compliance education and submit commitments within the specified time, or if the relevant irregularities cause obvious adverse effects or consequences, the Association may take self-regulatory measures such as warning, ordering corrections, and inclusion in the offline investor restriction list depending on the seriousness of the circumstances.

If a violation occurs due to force majeure or the negligence of a third party business institution such as a custodian agency, bank, or securities company, and offline investors themselves are not responsible and can provide valid supporting documents, they can apply to the Association for exemption from liability.”

21. Amend Article 57 to Article 60, and amend the second paragraph to read: “The placement target shall not participate in the offline inquiry and placement business, and during the period of inclusion in the restricted list, the placement target shall not participate in the offline inquiry and placement business of projects related to various market sectors of the stock exchange.”

Section 3 was amended to read: “Offline investors are prohibited from participating in offline inquiry and placement services, and during the period of inclusion in the restricted list, none of the placement targets managed by them may participate in the offline inquiry and placement business of projects related to each market sector of the stock exchange.”

22. Amend Article 58 to Article 61, and amend the first paragraph to read: “If offline investors and their sales targets, workers, securities companies and their personnel violate the relevant provisions of these Rules, the Association may comprehensively consider subjective and objective factors such as market conditions, the nature of the violation, harmful consequences, social impact, and degree of fault to take work measures or self-regulatory measures.”

Paragraph 2 was amended to read: “Where any of the following circumstances exist, treatment measures may be mitigated, mitigated or exempted from being taken:

(1) The circumstances of the violation were significant and minor, had no obvious adverse effects, and the violation was actively and effectively rectified before it was discovered;

(2) The relevant competent authority has already given disciplinary action;

(3) Other circumstances determined by the Association.”

23. Amend Article 64 to Article 67, and amend the first paragraph to read: “Where a case is to be subject to disciplinary action after preliminary examination, it shall be reviewed by the Association's Self-Regulatory Disposition and Internal Audit Professional Committee (hereinafter referred to as the Self-Regulatory Disciplinary Committee). After the initial trial of a difficult, complex, or major case, with the approval of the head of the association, it may be reviewed by the Self-Disciplinary Committee.”

Paragraph 3 was amended to read: “The Self-Regulatory Commission shall complete the review within 30 working days from the date of receipt of the preliminary investigation report of the case and related materials.”

Accordingly, Article 67 was changed to Article 70, and paragraph 3 was amended to read: “Cases reviewed by the Self-Disciplinary Committee shall be reviewed by the Self-Regulatory Disciplinary Committee. Cases reviewed by the offline investor self-regulatory administration department can be reviewed by the Self-Regulatory Commission after approval by the head of the association. The Self-Regulatory Commission shall complete the review and submit it for approval within 30 working days from the date of acceptance of the application for review. The review procedure of the Self-Regulatory Commission is carried out in accordance with the “Measures for the Implementation of Self-Regulatory Measures” and other relevant regulations.”

24. Amend Article 69 to Article 72, and amend the first paragraph to read: “The Association may conduct self-regulatory inspections and investigations on offline investors, securities companies, and their staff carrying out offline inquiry and placement services for initial securities in accordance with the needs of self-regulatory management. Self-regulatory inspections and investigations can be carried out in the following ways:

(1) Require self-regulatory management targets to conduct self-inspections or make written explanations or promises;

(2) Entering the office or place of business subject to self-regulatory management to carry out inspections and investigations;

(3) Require self-regulatory management targets to provide systems, documents and data relating to inspection and investigation matters within a limited period of time, including but not limited to financial accounts, securities accounts, bank accounts, etc. relating to inspection or investigation matters, or to check information systems relating to inspection or investigation matters;

(4) Request an explanation of the inspection or investigation matters by sending an inquiry letter or directly asking the directors, supervisors, legal representatives, executive partners or their appointed representatives, senior managers, other staff, shareholders, actual controllers, or other related parties of the self-regulatory management target;

(5) Check, copy, or record systems, documents, or materials relating to inspection or investigation matters, and fix documents, materials, electronic data, etc. that may be transferred, hidden, or destroyed;

(6) Other legally necessary means.”

Paragraph 2 was amended to read: “Offline investors, securities companies and their staff shall cooperate with the Association's self-regulatory inspections and investigations, and shall not refuse, delay, or provide untrue, inaccurate, or incomplete information for any reason.”

Add a paragraph as the third section: “After on-site inspection or investigation enters the site, the Association shall send an integrity supervision card to the self-regulatory management target to inform the self-regulatory management target of the integrity supervision rights of the inspection and investigation work.”

25. Add an article as Article 74: “The targets of self-regulatory management referred to in these rules refer to offline investors, securities companies, and their employees.”

26. Amend Article 72 to Article 76 to read: “The Association is responsible for interpreting these rules and takes effect from the date of publication.”

27. Schedule 1 “Detailed List of Registration Documents for Offline Investors of Initial Securities”, Schedule 3 “List of Verification Materials for Securities Companies to Meet Recommended Registration Conditions for Offline Investors”, and Schedule 5 “Instructions and Letter of Commitment for Offline Investors (Model)” will be revised simultaneously.

The “Rules for the Administration of Offline Investors in the Initial Public Offering of Securities” were amended accordingly and the order of the provisions was adjusted accordingly and re-published in accordance with this Decision.

Rules for managing offline investors in initial public offering of securities

(Approved by the 26th meeting of the 7th Council of the China Securities Association, revised and issued on October 18, 2024)

Chapter I General Provisions

Article 1. These rules are formulated in accordance with the “Administrative Measures on Securities Issuance and Underwriting” and other relevant laws, regulations, and supervisory regulations to regulate the self-regulatory management of offline investors in initial public offering securities (hereinafter referred to as initial securities), maintain the offline issuance order, and purify the offline issuance ecosystem.

Article 2 These Rules apply to offline investors participating in the offline inquiry and placement business of initial securities on stock exchanges, securities companies carrying out recommendation work for offline investors of initial securities, and securities companies acting as lead underwriters of initial securities to carry out offline investor selection and management work, etc.

When the above entities carry out business related to the initial public issuance of depository certificates in China, they shall apply in accordance with these rules.

Article 3. The China Securities Association (hereinafter referred to as the Association) shall self-regulate the management of offline investors in accordance with the “Administrative Measures on Issuance and Underwriting of Securities” and the relevant provisions of these Rules.

The Association establishes an offline investor tracking, analysis and evaluation system, which is separately stipulated by the Association.

Chapter II: Offline Investor Registration Management

Section 1 Registration Requirements

Article 4. Investors and their own investment accounts or directly managed securities investment products shall meet the conditions stipulated by the Association and complete the registration of offline investors and securities placement targets (hereinafter referred to as placement targets) by the Association.

Professional institutional investors such as securities companies, fund management companies, insurance companies and asset management subsidiaries of the aforementioned institutions, futures companies, trust companies, finance companies, qualified overseas investors, and private equity fund managers who meet certain conditions can participate in the online inquiry and placement business of Initial Securities after completing the registration of the Association. Futures asset management subsidiaries are managed with reference to private equity fund managers.

Other legal entities and organizations established by law in China (hereinafter collectively referred to as general institutional investors) and individual investors that meet certain conditions can participate in the offline quotation and placement business of the Main Board Initial Securities after completing the registration of the Association.

The Association may adjust the registration conditions for offline investors and placement targets according to market conditions.

Article 5. Institutional investors registering as offline investors shall meet the following basic conditions:

(1) They shall be professional institutional investors that have obtained administrative licenses in accordance with law as stipulated in Article 4 of these Rules; private equity investment fund managers established by law and completed registration procedures with the China Securities Investment Fund Industry Association; general institutional investors who have been engaged in securities trading for at least two years (inclusive) and have rich experience in securities trading in the Shanghai market and Shenzhen market. Among them, the total size of private equity funds managed by private equity investment fund managers should be at least 1 billion yuan (inclusive) in the last two quarters, and at least one of the private equity investment funds managed in the past three years had a lifespan of at least two years (inclusive);

(2) Have a good credit history and ability to continue to operate; have not been subject to criminal punishment, administrative supervision measures, or disciplinary action by relevant supervisory authorities for major offenses in the last 12 months; not taken written self-regulatory management measures more than three times (inclusive) by relevant self-regulatory organizations in the last 36 months; not included in the list of untrustworthy executees, the list of business anomalies, or the list of serious violations of trust in market supervision and management. There have been no major business risk incidents in the last 12 months, no major business risk incidents have been ordered to be closed and rectified, or designated in accordance with law Risk management measures such as institutional trusteeship, takeover, and administrative restructuring;

(3) Have professional securities research and pricing capabilities, have a scientific and reasonable valuation and pricing model, a perfect pricing decision system, and be able to make investment decisions independently. Personnel engaged in initial securities research and investment should have at least two years (inclusive) of experience in equity asset research or equity or hybrid product investment management;

(4) Have the necessary compliance risk control capabilities, exhibit in accordance with the law, incorporate participation in the online inquiry and placement business of initial securities into the overall compliance risk control system, and appoint specialized personnel to strengthen compliance management and risk control. Compliance managers in the online inquiry and placement business of Initial Securities should have at least two years (inclusive) of work experience in financial compliance management, and have a bachelor's degree or above in law, finance, or other related majors, or have passed the national unified legal profession qualification examination;

(5) Strong risk tolerance and ability to independently bear investment risks. The risk tolerance rating of general institutional investors should be C4 (inclusive) or above;

(6) It has independence to carry out offline inquiry and placement services for initial securities, and can independently carry out initial securities research and pricing, offline inquiry and subscription services;

(7) Establish a complete system and mechanism for participating in the offline inquiry and placement business of initial securities, including but not limited to institutional mechanisms such as internal control, investment research, pricing decisions, quotation and subscription, and communication equipment control;

(8) Establish and improve internal accountability mechanisms and remuneration assessment mechanisms for initial securities, clarify matters such as responsibility determination and accountability of relevant business personnel, and determine personnel remuneration standards by comprehensively considering various factors such as professional competency, quality of practice, compliance, and business income of researchers and investment decision makers; (9) Other conditions required by supervisory authorities and associations.

Article 6. Individual investors registering as offline investors shall meet the following basic conditions:

(1) Should be a Chinese citizen or a foreigner with permanent residency status in China;

(2) Engaged in the securities investment business full-time and had a trading period of at least five years (inclusive). He has rich experience in securities trading in the Shanghai market and the Shenzhen market. Of the unrestricted stocks and unrestricted depository certificates purchased from the secondary securities market held in the last three years, at least one has been held continuously for more than 180 days (inclusive);

(3) Have a good credit history, have not been criminally punished in the last 12 months, have not been subject to administrative punishment, administrative supervision measures, or disciplinary action taken by relevant supervisory authorities for major violations of laws and regulations; have not been taken written self-regulatory management measures by relevant self-regulatory organizations more than three times (inclusive) in the last 36 months; and have not been included in the list of untrustworthy executees in the last 12 months;

(4) Have professional securities research and pricing capabilities, have scientific and reasonable valuation and pricing methods, and be able to make investment decisions independently;

(5) Have strong risk tolerance, can independently bear investment risks, and their risk tolerance level should be C4 (inclusive) or above;

(7) Other conditions required by supervisory authorities and associations.

Article 7. Proprietary investment account registrants belonging to offline investors shall have certain investment strength, and the total market value of unrestricted stocks and unrestricted depository certificates purchased from the secondary markets of the Shanghai Stock Exchange and the Shenzhen Stock Exchange shall not be less than 60 million yuan as of the end of the most recent month. In addition to this, the total market value of unrestricted stocks and unrestricted depository certificates purchased from the Science and Technology Innovation Board should not be less than 6 million yuan by the end of the most recent month when registering business rights on the Science and Technology Innovation Board.

Article 8. Targets registered for placement of securities investment products directly managed by offline investors shall meet the following conditions:

(1) It shall be a social security fund, pension fund, insurance fund, qualified overseas investor account; equity and hybrid asset management products of financial institutions; equity and hybrid private equity investment funds, and their direct investment in the assets of privately raised financial institution asset management products and private equity funds shall not exceed 20%;

(2) Product registration, registration, filing procedures, share sales, escrow, etc. shall be completed in accordance with law. Private equity investment funds shall entrust a third party custodian agency to independently manage fund assets;

(3) Having certain asset management capabilities, the total market value of unrestricted stocks and unrestricted depository certificates purchased from the secondary markets of the Shanghai Stock Exchange and Shenzhen Stock Exchange should not be less than 60 million yuan as of the end of the most recent month. Register for the Science and Technology Innovation Board business license. The total market value of unrestricted stocks and unrestricted depository certificates purchased from the Science and Technology Innovation Board should not be less than 6 million yuan as of the end of the most recent month. Public funds, social security funds, pensions, annuity funds, insurance funds, and placement targets applied for registration by qualified overseas investors are excluded;

(4) Product investment managers should have at least two years (inclusive) of experience in equity asset research or equity or hybrid product investment management.

Placement targets applying for registration must not be trust asset management products, nor may they participate in the offline inquiry and placement business of initial securities for the main investment purpose of obtaining price differences in the primary and secondary markets of Securities.

Section II Registration Procedure

Article 9 Investors from professional institutions such as securities companies, fund management companies, insurance companies and asset management subsidiaries, futures companies, trust companies, finance companies, and qualified overseas investors of the aforementioned institutions may register themselves with the Association.

In addition to the professional institutional investors described in the preceding paragraph, institutional investors and individual investors that meet certain conditions, such as private equity fund managers, shall be recommended to register with the Association by securities companies with securities underwriting and sponsorship business qualifications.

Article 10. When applying to the Association for registration as an offline investor and placement target, basic information and relevant qualification documents shall be submitted through the Association's offline investor management system. Investors shall ensure that the registration information and data submitted by them are true, accurate and complete.

The securities company shall verify the recommended registered offline investors and placement targets to ensure that they meet the basic conditions stipulated in these rules and the company's internal rules and procedures.

Investors should cooperate with the securities company in managing the appropriateness of offline investors, truthfully provide information and relevant supporting documents, and must not circumvent investor appropriateness management requirements by providing false information materials, etc. Where there are major changes in the information materials provided by investors that may affect the securities company's proper management, the securities company shall be promptly notified.

Article 11. In principle, the Association shall complete the registration process within ten working days from the date the application materials for offline investor registration are ready. If the registration application materials of the applicant for an offline investor are incomplete or do not meet the requirements, they shall make corrections or provide explanations in accordance with the requirements of the Association; if they do not meet the registration requirements, the Association shall notify them in writing of the reasons for not registering; if they meet the registration conditions, the Association shall publicize the basic information of the offline investor through the official website.

The time for offline investors to issue corrective materials and explanatory documents is not included in the registration processing time limit.

Article 12 When the registration information of an offline investor or a sales target managed by an offline investor changes, an application for a change in registration information shall be promptly submitted to the Association. Once registered, securities accounts and bank accounts cannot be changed at will.

After accepting the application documents for the change of registration information, the Association shall promptly complete the information change; if the registration information is not changed, the offline investors shall be notified in writing of the reasons for not changing the registration information.

Section III Account Management

Article 13 The issuer and lead underwriter of an initial securities project may set specific conditions for offline investors and disclose them in advance in the relevant issuance announcements. The specific conditions shall not be lower than the basic conditions stipulated in these rules.

The issuer and lead underwriter shall require the placement targets designated by offline investors participating in the project's offline inquiry and placement business. The average daily market value of the total market value of unrestricted stocks and unrestricted depository certificates on the 20 trading days (including the reference date) before the initial inquiry date for the project shall be at least 60 million yuan (inclusive) on the stock exchange where the project was issued and listed. Closed operation funds and closed operation strategic placement funds with themes such as science and innovation and entrepreneurship should have an average daily market value of at least 10 million yuan (inclusive) of unrestricted stocks and unrestricted depository certificates in the 20 trading days prior to the benchmark date (including the reference date).

Placement targets designated by offline investors participating in the Science and Technology Innovation Board's offline inquiry and placement business shall, in addition to meeting the market value requirements stipulated in the preceding paragraph, also comply with the relevant regulations of the Shanghai Stock Exchange.

The lead underwriter shall check whether it meets the offline investor conditions disclosed in advance for the initial securities project within the scope of offline investors and placement targets that have completed the registration of the association, and select offline investors and placement targets that can participate in the offline inquiry and placement business of the project. Ineligible offline investors and placements should be rejected or excluded from their offers.

Article 14 Where the following important matters occur to an offline investor or a sales target managed by an offline investor, the offline investor shall report to the Association on their own or through a securities company recommending their registration within ten working days from the date of occurrence:

(1) Offline investors are dissolved, deregistered, revoked, declared bankrupt or died in accordance with law;

(4) The placement target managed by the offline investor has been terminated or liquidated;

(8) Other important matters affecting offline investors or placements that continue to meet registration requirements.

Article 15 Where an offline investor or a sales target managed by an offline investor is prohibited from participating in the offline inquiry and placement business, and is included in the restricted list, it will automatically be suspended after the expiration of the period. Where an offline investor or placement target managed by an offline investor has been suspended, those applying to re-participate in the initial securities online inquiry and placement business shall submit a registration application to the Association in accordance with the registration procedure and meet the registration conditions for the offline investor or placement target.

Article 16 Where the placement target account managed by an offline investor does not participate in the initial securities online quotation inquiry within a natural year, the Association manages the placement target account as a dormant account, with the exception of newly registered placement target accounts in that year. The placement target accounts managed by offline investors are all dormant accounts, and the offline investor account is managed as a dormant account.

Offline investors or the placement target accounts managed by them are not allowed to participate in the offline quotation and placement business of initial securities while they are dormant. Where dormant accounts re-participate in the offline inquiry and placement business of initial securities, they shall submit a dormant account activation application to the Association in accordance with the registration procedure and meet the registration conditions for offline investors or placement targets.

Article 17. The Association shall strengthen the management of offline investor information and related data. No organization or individual shall disclose or divulge offline investor information and related data without authorization, and shall not unlawfully use offline investor information and related data data that they know for commercial purposes.

If any of the following circumstances are met, the Association provides an inquiry service:

(1) Offline investors inquire about information or data relating to themselves or the placement targets they manage;

(2) Securities companies need to be queried and used in order to perform offline investor management and inspection duties;

(4) A stock exchange requires relevant information or data to perform its duties in accordance with laws, administrative regulations, or regulatory regulations; (5) Other situations where relevant information or data is actually required to perform its duties in accordance with law.

Chapter III Code of Conduct for Offline Investors

Section 1 Basic Requirements

Article 18 Where offline institutional investors participate in the offline inquiry and placement business of initial securities, they shall establish a complete internal control system and business operation process to comprehensively manage the business development situation to ensure that the business is carried out in accordance with the relevant provisions of these Rules:

(1) Establish an initial securities research mechanism, research report writing and approval mechanism, adhere to the principles of science, independence, objectivity and prudence, carry out initial securities research and research report writing work, adopt strict research methods and analytical logic, establish necessary valuation and pricing models, conduct in-depth analysis of issuer investment values, etc., write initial securities research reports based on reasonable data bases and factual bases, carefully present research conclusions, reasonably determine the price or price range of the initial securities, and strictly implement the research report approval mechanism;

(2) Necessary investment decision-making mechanisms shall be established and perfected, and the final quotation shall be determined through strict implementation of decision-making procedures;

(3) Formulate a complete compliance management system, conduct compliance reviews on the conditions of participation in the online inquiry and placement business of initial securities, review whether there are relationships with the project issuer or lead underwriter in compliance with the relevant rules, and conduct regular or irregular compliance checks on the objectivity and prudential back-verification of quotations, etc., to ensure that business is carried out lawfully and in compliance;

(4) Formulate a complete risk management system, monitor, analyze and identify risks that may occur in all aspects of the business, and take necessary risk control measures to prevent and mitigate risks in a timely and effective manner to ensure that business risks are measurable, controllable and bearable;

(5) Formulate complete special business operation procedures, and clarify operating procedures, job responsibilities and division of authority. An A and B corner and review mechanisms should be set up for important operations such as quotation, subscription, and payment;

(6) Approval procedures for the transfer of subscription funds shall be formulated, and full provision of funds shall be arranged according to the subscription plan to ensure that the funds are transferred to the settlement bank account within a specified period of time;

(7) Strengthen staff management, standardize the practice behavior of relevant staff, and avoid acts of seeking or transferring improper benefits in the course of carrying out business. Establish and improve business training mechanisms, organize and carry out targeted business training on a regular or irregular basis, and continuously improve the practice level of staff;

(8) Establish a complete communication tool management and control system, and uniformly control the communication equipment, communication software, etc. of personnel familiar with the quotation such as research, investment, decision-making, and trading during the transaction time on the day of the inquiry to avoid disclosure of price information and ensure that relevant staff are independent and objective during the inquiry process;

(9) Establish a complete filing system for working papers, and will participate in the filing and inspection of working papers related to the offline inquiry and placement business of initial securities.

Article 19. Offline investors shall reasonably determine the scope and quantity of products participating in the offline inquiry and placement business of initial securities according to their own management capabilities, number of personnel resources, product investment strategies, product risk tolerance, etc.

Offline investors and their managed placement targets shall also comply with the requirements of supervisory authorities and other relevant self-regulatory organizations and comply with relevant regulations where they participate in the offline inquiry and placement business of initial securities.

Article 20. Offline investors shall file and inspect relevant data such as the pricing basis for each quotation, pricing reports or pricing decision meeting minutes formed during the pricing decision process, and communication tool control records of personnel familiar with the quotation. The storage period for offline investors to participate in the offline inquiry and placement business of initial securities shall not be less than 20 years.

The system storage time, storage time, or last modification time of relevant data such as the pricing basis, pricing decision process, etc. that offline investors archive and review should be before the inquiry is completed; otherwise, it is considered that there is no pricing basis or data related to the pricing decision process.

Article 21 Before participating in the offline inquiry and placement business of initial securities, offline investors shall carefully read these rules and related business rules and operating guidelines, familiarize themselves with the operation process, and conduct self-checks on pre-quotation preparations to ensure that the information registered by the association is true, accurate, and complete, that the relevant placement target is within the registration validity period and that payment channels are unobstructed during the offline inquiry and placement process, and that essential subscription and payment tools such as CA certificates and registered bank accounts on the stock exchange offline subscription platform can be used normally.

Where the placement target managed by an offline investor is about to expire and needs to be extended, the placement target should be promptly submitted to the Association. Offline investors are not allowed to change registration information such as names (names), securities accounts, bank accounts, etc. at will while participating in the initial securities offline inquiry and placement business, and should prepare emergency plans for emergencies such as power outages and network failures to avoid being unable to purchase or pay after the quotation.

If an offline investor violates the rules due to failure to prepare an offer or an emergency plan, the Association will take measures to deal with it in accordance with the relevant regulations.

Article 22. Investors from offline professional institutions who register themselves shall carry out an appropriateness self-inspection every six months to promptly update the registration information of offline investors and their managed placement targets. If you find that you or your managed placements do not meet the registration requirements stipulated in these Rules, you should promptly report to the Association and apply for account suspension or cancellation.

Article 23. In accordance with the requirements of the Association, offline investors shall submit to the Association information, financial conditions, investment operations, and other information on offline investors and related parties and funders of the placement targets managed by the Association.

Offline investors should ensure that the submitted information is true, accurate, complete and timely. The Association can establish an offline investor affiliate information search platform for use by lead underwriters and offline investors.

Section II Research Pricing

Article 24 When participating in the initial securities offline inquiry business, offline investors shall carefully choose to participate in the project, carefully study the issuer's information, use professional pricing capabilities, make rational quotations on the basis of thorough research and/or strict implementation of pricing decision procedures, and must not engage in acts that are not independent, unobjective, dishonest, unscrupulous, etc., and must not have investment advisors or other institutions or individuals make investment decisions or directly execute investment instructions.

Article 25 The pricing basis for offline institutional investors shall include at least a research report independently written in-house. The research report includes, but is not limited to, the following content:

(1) Research on issuer fundamentals. Research the rules and trends of industry development, the issuer's business model, business prospects and management's ability to control operations, etc., and analyze the issuer's core competitive advantages;

(2) Analysis of the issuer's profitability and financial situation. This includes, but is not limited to, making careful and reasonable predictions and estimates of important financial matters for the issuer's future accounting period, and clearly and detailed explanations of important assumptions and parameters;

(3) A reasonable valuation pricing model. Offline investors should use at least one reasonable valuation and pricing method. Where an absolute valuation method is used, a detailed explanation of the valuation pricing model, model assumptions, main valuation parameter settings, and a rigorous and complete logical deduction process should be included. Where a relative valuation method is used, it shall include the selection of comparable companies and the basis for selection, and a rigorous and complete logical deduction process;

(4) Conduct a sensitive analysis of the issuance of initial securities with old stock transfer arrangements (if any);

(5) Specific quotation suggestions or recommended price ranges, etc.

Article 26. Offline institutional investors shall establish an initial securities pricing team to conduct collective research and decisions on specific pricing suggestions or recommended price ranges based on pricing, and determine the final price quotes for initial securities. Pricing team members include, but are not limited to, initial securities researchers and investment decision makers.

The pricing team shall record the basis and process of making the final quotation in the form of an initial securities pricing report or the minutes of the pricing decision meeting.

The initial securities pricing report or pricing decision meeting minutes shall fully and strongly support the final quotation results and shall be signed or signed in writing by all members of the pricing team participating in the initial securities project.

Article 27 Offline individual investors shall have a pricing basis that has been independently written. The pricing basis shall include at least reasonable valuation pricing methods, explanations of assumptions and main valuation parameters, logical deduction processes, and specific quotation suggestions or recommended price ranges. Where an absolute valuation method is used, the pricing basis shall also include the valuation pricing model and the issuer's profit forecast and assumptions for the next three years. Profit forecasts should be careful and reasonable.

Where the pricing is based on the proposed price range, offline individual investors should also research and decide on the recommended price range to determine the final price price of the initial securities. Offline individual investors should file and check the basis for pricing decisions.

Article 28 Where an offline investor's pricing is within the price range based on the quotation suggestions provided, the difference between the highest price and the lowest price shall not exceed 20% of the lowest price.

Article 29. Offline investors shall use the investment value research report provided by the lead underwriter of the initial securities project in a reasonable and prudent manner, and shall not disclose or disclose the investment value research report or its contents in any form, or publish false or inappropriate remarks relating to the offline inquiry and placement business, causing adverse effects or consequences on the offline distribution order.

Section 3. Quotation and Subscription

Article 30. Offline investors participating in the inquiry shall provide relevant information and materials in accordance with the requirements of the lead underwriter of the initial securities project to ensure that the information and materials provided are true, accurate and complete. Offline institutional investors should provide relevant information materials to the lead underwriter after completing the compliance review procedure.

Article 31 Before an offline inquiry for an initial securities project begins, an offline investor shall submit the pricing basis and the suggested price or price range given through the stock exchange's offline subscription platform. Offline investors who have not submitted a pricing basis, recommended price, or price range are not allowed to participate in the inquiry.

Article 32. Offline investors shall make quotations according to the recommended price or price range given on the pricing basis. In principle, they shall not modify the recommended price or make quotations beyond the recommended price range.

Where an initial securities project determines the issuance price through cumulative tenders and inquiries, the offline investors' subscription offer and inquiry price shall be logically consistent.

Article 33 In principle, an offline investor shall not revise the price after making an offer. Where there is a real need to revise the price, offline investors should fully explain the reason for the price change, the logical calculation basis for the price change margin, whether the previous quotation had insufficient pricing basis and/or incomplete pricing decision procedures, etc., and file and check data such as the basis for the price change and/or re-implementation of the pricing decision procedure.

Offline institutional investors should strengthen internal management of withdrawing orders and revising prices after an offer. Where price revisions are really necessary, they should re-implement the pricing decision process.

Article 34. Offline investors who are controlled by the same actual controller or have other related relationships shall independently carry out offline inquiry and subscription services.

If offline investors have a related relationship or agree on matters such as disposition of joint property or stock investment, etc., they should ensure that effective quarantine measures are taken to independently carry out offline inquiry and subscription services on the premise of complying with the requirements of relevant laws, regulations and regulatory regulations, and must not negotiate on matters such as writing the pricing basis or determining the quotation range or specific price when participating in the offline inquiry and subscription business for the same project. Those who cannot take effective quarantine measures to independently carry out offline inquiry and subscription services shall not participate in offline inquiry and subscription services for the same project.

The same placement target managed by an offline investor can only use one securities account to participate in the online inquiry for initial securities. Other related accounts are not allowed to participate, except as otherwise stipulated by the China Securities Regulatory Commission and Association.

Placement targets and their associated accounts that have participated in the offline inquiry are not allowed to participate in the online subscription. The determination of linked accounts is subject to stock exchange regulations.

Article 35. In the preliminary inquiry process for initial securities, offline investors participating in the inquiry may submit a separate quotation for the different placement target accounts managed by them. Each quotation shall include the placement target information, the price of the securities, and the quantity to be purchased corresponding to that price. There are no more than 3 different proposed subscription prices in the total price quoted by the same offline investor, and the difference between the highest price and the lowest price must not exceed 20% of the lowest price.

Article 36. In principle, offline investors shall truthfully provide the lead underwriter of the initial securities project with the asset size report of the placement target at the end of January and relevant supporting documents, and comply with the relevant requirements of the lead underwriter. During the initial inquiry process for initial securities, offline investors should reasonably determine the quantity to be purchased and the amount to be purchased for the placement target based on actual purchase intentions, financial strength, risk tolerance, etc.

The number of proposed subscriptions reported by an offline investor for the placement target shall not exceed the total amount of initial offline distribution, nor shall it exceed the maximum number of subscriptions for a single placement target determined by the lead underwriter. Offline investors should ensure that the number of purchases they intend to purchase and future shareholding conditions comply with relevant laws and regulations and the regulations of the supervisory authorities.

In principle, the proposed subscription amount reported by an offline investor for the placement target shall not exceed the lower value of the total assets of the placement target at the end of the most recent month or the total assets before the inquiry. If the placement target has been established for less than a month, in principle, the lower value is calculated based on the total assets of the product on the fifth trading day before the first day of the inquiry. The fund balance of placement targets managed by offline general institutional investors and individual investors at the end of January in a fund account opened by a securities company should not be less than 1％ of the total assets of their securities account and fund account at the end of the most recent month, and the fund balance before the inquiry shall not be less than 1％ of the total assets of their securities account and fund account.

Where the issuance price of an initial securities project is determined through cumulative tenders and inquiries, the subscription amount reported by offline investors for the placement target during the inquiry and placement process shall comply with the provisions of the preceding paragraph.

Article 37. Offline investors who provide valid quotations shall subscribe within the subscription period in accordance with the requirements of the announcement. Where the initial inquiry determines the issuance price range, the offline investor shall fill in a subscription price and subscription quantity for the placement target providing a valid quotation within the issuance price range. There are no more than 3 different subscription prices in the total price quoted by the same offline investor. The subscription quantity reported by the placement target shall not be less than the quantity to be purchased corresponding to the valid offer at the time of the initial inquiry.

Article 38. Offline investors shall reserve sufficient subscription funds according to the proposed subscription amount to ensure that they can pay the subscription funds in full and on time. The placement target shall use a bank account registered with the Association to process the transfer of subscription funds in accordance with the time required by the announcement.

The source of funds used by the placement target for offline purchases and the amount of shares held after being placed shall comply with the requirements of relevant laws, regulations and regulatory regulations.

Section 4 Compliance Risk Control

Article 39. Offline investors shall determine whether to participate in the offline inquiry for initial securities based on factors such as the investment strategy, investment scope and ratio, risk tolerance, capital size, and lock-up period of the placement target, and carefully choose to participate in the initial securities project.

Article 40. Offline investors shall conduct compliance checks on whether they have relationships with the project issuer or lead underwriter as stipulated in the relevant rules, whether their quotation and subscription acts violate the provisions of these rules and the requirements of the company's internal system, etc., to ensure that the business is carried out lawfully and in compliance.

Article 41 Before filling in the quantity to be purchased for the initial securities offering, offline institutional investors shall ensure that the proposed subscription amount does not exceed the total assets and cash assets of the placement target in accordance with the subscription requirements, taking into account factors such as asset size data before the placement target inquiry and the subscription and redemption requirements, and measure risk control indicators such as the concentration of positions of a single product and all products after distribution and the proportion of assets with limited liquidity to ensure that the amount of shares to be purchased and future shareholding conditions complies with laws, regulations and product contract agreements.

Article 42. Offline institutional investors shall set up risk performance assessment indicators for initial securities, backcheck the objectivity and prudence of quotations, prevent improper quotations and irregularities, implement deferred payment or refund mechanisms for pricing team members in accordance with internal systems and labor contract provisions, and regularly report to the Association for negative public opinion, complaints, reports, etc. caused by their own improper pricing behavior.

Section 5. Prohibition of sexual acts

Article 43 When participating in the offline inquiry and placement business of initial securities, offline investors or placement targets managed by them shall not engage in the following acts:

(1) Where the submitted information contains false records, misleading statements, or major omissions;

(2) Using someone else's account or multiple accounts to quote;

(3) Entrusting others to carry out offline inquiry and subscription services for initial securities, or receiving commissions from other offline investors to carry out offline initial securities inquiry and subscription business on their behalf, except where authorized by an administrative authority;

(4) Disclosing the agency's or its own valuation pricing method, valuation pricing parameters, or relevant quotation information before the inquiry is completed, inquiring, collecting, or disseminating the above information from other offline investors, or negotiating quotations on the above information among offline investors;

(5) Where there is a collusion with the issuer or underwriter to announce the price;

(6) Using insider information or undisclosed information to make quotations;

(7) Intentionally lowering or inflating the offer for the purpose of “being selected for the blog”, etc., or made an unprudent offer;

(8) Obtaining improper benefits by inflating the size of assets through nested investments, etc.;

(9) Accept financial support, compensation, rebates, etc. from issuers, underwriters, and other stakeholders;

(10) The quantity to be purchased has not been reasonably determined, and the amount of shares to be purchased and/or the amount of shares held after being allocated does not meet the requirements of relevant laws, regulations or regulatory requirements;

(11) Where the quantity to be purchased has not been reasonably determined, and the proposed subscription amount exceeds the total assets of the target of the placement;

(12) Failure to comply with quotation evaluation and decision-making procedures, and/or no basis for pricing;

(13) Simultaneous online and offline subscription;

(14) Failure to abide by relevant promises such as sales restrictions after being distributed;

(15) Failure to strictly follow quotation evaluation and decision-making procedures, and/or insufficient pricing basis;

(16) Providing a valid quotation but not participating in the subscription or not subscribing in full;

(17) Failure to pay the subscription funds in full and on time;

(18) Failure to make a subscription or payment due to failure of timely renewal;

(19) Data documents such as asset size reports submitted to the lead underwriter are inaccurate, incomplete, or inconsistent;

(20) Where the data information submitted to the Association is inaccurate, incomplete, or inconsistent;

(21) Other situations that affect the offline distribution order by seeking or conveying improper benefits in any form or that are not independent, objective, dishonest, or unclean.

Chapter IV: Liability of Securities Companies

Article 44. The Association shall establish self-regulatory rules for the proper management of offline investors in securities companies, and guide and supervise securities companies to continuously improve the management and service level of offline investors.

Article 45 A securities company shall carefully check whether investors meet the recommended conditions, fill in registration information, and whether the number of recommended offline investors apply for registration matches their management capabilities, etc., to ensure that the information provided by investors is true, accurate, and complete, and that the recommended offline investors and placement targets meet the basic conditions stipulated by the Association and the recommended conditions stipulated by the company.

Article 46 A securities company shall carry out a self-inspection of the appropriateness of offline investors at least every six months to form a self-inspection report. If a securities company discovers that the recommended offline investor or the placement target managed by the securities company has a situation stipulated in Article 14 of these Rules or other circumstances determined by the securities company that does not meet the appropriate management requirements, it shall issue a written reminder to the offline investor within ten working days from the date of discovery, informing them that they have not continuously complied with the appropriate management requirements for offline investors and proposed subsequent measures, and report to the Association and put forward clear treatment opinions.

Article 47 A securities company shall take effective measures to carry out offline investor education, fully disclose the risks of the initial securities offline inquiry and placement business, guide offline investors to participate in the offline inquiry and placement business of initial securities in accordance with the law, and inform them that acts that violate these rules will be dealt with by the Association.

Offline investors recommended by securities companies are included in the management of watch lists, abnormal lists, etc. by the Association. Due to situations where they do not meet the basic conditions stipulated by the Association or do not have the suitability of offline investors, or where measures are taken to deal with irregularities, securities companies should promptly inform offline investors about measures taken, and do a good job of educating and serving offline investors.

Article 48. In accordance with the requirements of the Association, securities companies shall issue supporting documents such as asset size reports for their brokerage business investors and their escrow placement clients to participate in the offline inquiry and placement business of initial securities, and ensure that the supporting documents issued are true, accurate, and complete.

Article 49. Securities companies acting as lead underwriters for initial securities projects shall be diligent and conscientious, do a good job of verifying, monitoring and risk alerting for offline investors, carry out substantive checks on whether offline investors are prohibited from participating in quotation inquiries, whether the proposed subscription amount exceeds the total assets of the placement target, whether the amount of cash assets meet the subscription requirements, etc., monitor whether offline investors have prohibited acts listed in Article 43 of these Rules, and alert them to the risk of irregularities in important business operations such as offline subscriptions and payments. Offline investors who do not meet the requirements should reject or remove their offers to ensure that securities are not sold to targets prohibited by relevant laws, regulations, regulations, and self-regulation rules.

Article 50. A securities company acting as the lead underwriter of an initial securities project shall clarify the execution scale of the asset size verification of offline investors in the relevant announcement relating to the inquiry, compare the asset size report data of offline investors with the reported asset size data, and verify the legality and completeness of supporting documents such as asset size reports:

(1) For placement targets such as public funds, social security funds, pensions, annuity funds, insurance funds, securities investment accounts for qualified overseas investors, and proprietary investment accounts for professional institutional investors, etc., the proposed subscription amount shall not exceed the total asset amount in the product asset size report at the end of the most recent month. If the placement target has been established for less than one month, in principle, the proposed subscription amount shall not exceed the total asset amount in the product asset size report on the fifth trading day before the first day of the inquiry;

(2) In principle, the proposed subscription amount for placement targets such as private equity asset management plans, insurance asset management products, and private equity investment funds of securities and futures management institutions shall not exceed the total asset amount in the product asset size report issued by the custodian agency at the end of the most recent month;

(3) For placement targets managed by general institutional investors and individual investors, in principle, the proposed subscription amount shall not exceed the total asset amount (total amount of securities accounts and fund accounts) in the asset size report issued by the securities company at the end of the month. The fund balance of the fund account shall not be less than 1％ of the total assets. The lead underwriter may increase the cash asset ratio requirement in the aforementioned account according to market conditions.

Article 51. Securities companies shall effectively fulfill their responsibility to submit information, and perform the work of submitting information such as verification, inquiry, placement, and monitoring as required to ensure that the submitted information is true, accurate, complete and timely.

The securities company shall report information such as the size of the assets to be placed to the Association within ten trading days from the date of listing of the initial securities; if the securities company discovers that an offline investor has circumstances stipulated in section 43 (13), (16) to (18) of these rules, it shall report to the Association the day after the subscription date and the day after the payment date; if it is discovered that an offline investor has violated the provisions of section 43 (19) of these rules, it shall report it to the Association before the day after the inquiry date; Report to the Association by the day after the discovery date.

Article 52 In the offline inquiry and placement business of initial securities, securities companies and their staff shall not accept commissions from offline investors to write pricing bases or make quotations or subscriptions on their behalf, and shall not divulge investors' quotation information before the offline investor's quotation information is publicly disclosed.

Chapter V Self-Regulatory Management

Section 1. Types of Measures

Article 53 The work measures an association may take include:

(1) Send a letter of supervisory work;

(ii) interviews;

(3) Request a response;

(4) Request for a statement;

(5) Temporary suspension of offline investor or placement target accounts;

(6) Other work measures.

Article 54 Self-regulatory management measures that an association may adopt include:

(1) Reminders for conversations;

(2) Request the submission of commitments;

(3) Require participation in compliance education;

(4) You must not participate in offline inquiry and placement services for 1 to 12 months;

(5) Alerts;

(6) Order corrections;

(7) Order the agency where it is located to handle it;

(8) Order compliance checks;

(9) Suspend the registration of new placement targets;

(10) Be included in the restricted list of offline investors or placement targets for one month to 36 months;

(11) Offline investors or placements will not be accepted for registration for 1 to 36 months;

(12) We do not accept registration recommendations from offline investors or placements for 1 to 36 months;

(13) Other self-regulatory management measures.

The self-regulatory management measures listed in items (1) to (4) of the preceding paragraph are non-written self-regulatory management measures, and the self-regulatory management measures listed in items (5) to (12) are written self-regulatory management measures.

Article 55. Disciplinary sanctions that may be taken by the Association include: (1) industry cautions; (2) public censure; and (3) other disciplinary actions stipulated by the Association.

The self-regulatory management measures and disciplinary actions referred to in these rules are self-regulatory measures of the Association.

Association work measures and self-regulatory measures can be applied separately or in combination.

Section 2. Handling of Violations

Article 56 Where the applicant for an offline investor conceals important circumstances or provides false information to register an offline investor or placement target, the association shall not accept or register, and the applicant shall not submit another application for registration within one year.

Article 57. If an offline investor or the placement object managed by the offline investor does not meet the basic requirements stipulated in these Rules, and the registration information and data provided have false records, misleading statements or major omissions, etc., the Association may cancel the offline investor or the placement object managed by the offline investor, and take self-regulatory measures such as refusing to accept the registration of an offline investor or placement object for 12 to 36 months, industry cautions, and public censure.

Article 58 Where an offline investor experiences the circumstances stipulated in Article 43 (1) to (14) of these Rules, the Association shall take the following self-regulatory measures:

If an offline investor experiences the above situation once in a year, the offline investor is included in the offline investor restriction list for 6 months; if the above situation occurs twice, the offline investor is included in the offline investor restriction list for 12 months; if the above situation occurs more than 3 times (inclusive), the offline investor is included in the offline investor restriction list for 36 months.

Article 59 Where an offline investor experiences a situation as stipulated in Article 43 (15) to (20) of these Rules, and has not caused obvious adverse effects or consequences, the Association shall take the following self-regulatory measures:

If an offense occurs due to force majeure or the negligence of a third party business institution such as a custodian agency, bank, or securities company, and offline investors themselves are not responsible and can provide valid supporting documents, they can apply to the Association for exemption from liability.

Article 60. The number of violations of the relevant projects in each market sector of the stock exchange by an offline investor or the placement target managed by an offline investor is calculated collectively.

The placement target is prohibited from participating in offline inquiry and placement services, and during the period of inclusion in the restricted list, the placement target is prohibited from participating in the offline inquiry and placement business of projects related to various market sectors of the stock exchange.

Offline investors are prohibited from participating in offline inquiry and placement services, and during the period of inclusion in the restricted list, none of the placement targets managed by them are allowed to participate in the offline inquiry and placement business of projects related to various market sectors of the stock exchange.

Article 61 If an offline investor, the distribution target, staff, securities company and its staff violate the relevant provisions of these Rules, the Association may comprehensively consider subjective and objective factors such as market conditions, the nature of the violation, harmful consequences, social impact, and degree of fault and take work measures or self-regulatory measures.

If any of the following situations exist, treatment measures can be mitigated, mitigated, or exempted from being taken:

(1) The circumstances of the violation were significant and minor, had no obvious adverse effects, and the violation was actively and effectively rectified before it was discovered;

(2) The relevant competent authority has already given disciplinary action;

(3) Other circumstances determined by the Association.

If any of the following circumstances exist, the Association will take more or more serious measures to deal with it:

(1) Refusing to cooperate with the investigation or self-regulatory inspection of the case, failing to truthfully provide relevant materials, and tamper with, falsify, conceal, or destroy evidentiary materials;

(2) Threatening, intimidating, or retaliating against complainants, whistleblowers, investigators, inspectors, etc.;

(3) Refusing to rectify, perfunctory rectification, or false rectification;

(4) Causing significant adverse effects;

(5) Violations have occurred many times;

(6) Other circumstances determined by the Association.

Article 62 The Association may provide oral or written risk reminders to offline investors or their managed placement targets based on their participation in the daily monitoring of the online inquiry and placement business of initial securities.

Illegal acts of offline investors or placement targets managed by them may have a significant adverse impact on the market. In order to prevent the occurrence of adverse effects, the Association may take work measures such as temporarily suspending the accounts of offline investors or placement targets and notify offline investors.

Article 63: If a securities company violates the provisions of Articles 44 to 52 of these Rules, the Association will take work measures such as sending a letter of supervisory work, making a statement, etc., depending on the seriousness of the circumstances, or self-regulatory measures such as sending reminders, requesting submission of commitments, requesting participation in compliance education, warnings, ordering corrections, ordering compliance checks, and not accepting recommendations and registrations from offline investors or placement targets within a certain period of time.

If securities company personnel violate the provisions of Articles 44 to 52 of these Rules, etc., the Association will take work measures such as sending supervisory work letters, interviews, requests for responses, and statements, or self-regulatory measures such as talking reminders, requesting submission of commitments, requesting participation in compliance education, warnings, ordering corrections, and ordering the agency to handle them, depending on the seriousness of the circumstances.

Article 64. Where an offline investor, securities company, and its staff are suspected of breaking the law during the issuance and underwriting business or the inquiry and placement process, the Association shall hand over the 31st level lead to the China Securities Regulatory Commission for investigation and punishment. If it is suspected of constituting a crime, it shall be handed over to the judicial authorities for criminal responsibility in accordance with law.

Section II Implementation Procedures

Article 65 Sources of illegal leads include, but are not limited to:

(1) Illegal clues submitted by securities companies to the Association in accordance with the relevant provisions of Article 51 of these Rules;

(2) Illegal clues discovered by the Association in its self-regulatory management work;

(3) Relevant complaints and reports received by the Association;

(4) Illegal leads handed over to the Association by relevant entities such as the China Securities Regulatory Commission or the stock exchange;

(5) Other sources of illegal leads.

The sources of illegal leads listed in subparagraphs (1) and (4) of the preceding paragraph shall be deemed to have been filed when the Association reviews and approves or receives handover.

The sources of illegal leads listed in subparagraphs (2), (3) and (5) of the preceding paragraph shall be filed after approval by the head of the association.

Article 66 Special procedures shall be applied to cases where offline investors, their distribution targets, workers managed by them, securities companies and their personnel violate the provisions of these Rules, and the Association's offline investor self-regulatory administration department shall be responsible for the investigation and preliminary examination of the case. Cases heard by special procedures are not subject to hearing procedures.

The offline investor self-regulatory administration department shall complete the investigation of the case within 30 working days from the filing of the case, form a preliminary opinion, and submit it for approval. When the offline investor self-regulatory administration department handles cases, one staff member can independently complete the off-site investigation of the case, and one staff member can handle the case alone. Investigators and judges in the same case may not serve concurrently with each other.

Article 67 Where a case is to be subject to disciplinary action after initial trial, the Association's Self-Regulatory Disposition and Internal Audit Professional Committee (hereinafter referred to as the Self-Regulatory Disciplinary Committee) shall conduct a review. After the initial trial of a difficult, complex, or major case, the Self-Regulatory Commission may review it with the approval of the head of the Association.

The Self-Regulatory Commission shall complete the review within 30 working days from the date of receipt of the preliminary investigation report of the case and related materials.

The review procedure of the Self-Regulatory Commission is carried out in accordance with the “Implementation Measures on Self-Regulatory Measures of the China Securities Association” (hereinafter referred to as the “Measures for the Implementation of Self-Regulatory Measures”) and other relevant regulations.

Article 68 Where a case is to be judged and disciplinary action is to be taken, after being submitted to the head of the association for approval, a notice of intent to take self-regulatory measures shall be served to the person concerned; where work measures or self-regulatory management measures are to be taken, prior notice may be given according to actual needs.

The parties may submit written statements of defense within five working days from the date of receipt of the notice in advance. After the Association receives the written arguments, the adjudicators shall complete the review within ten working days and put forward opinions and reasons on whether to adopt them.

If the party concerned fails to submit a statement of defense within the specified time, it is deemed that the relevant rights have been waived, and there is no objection to the handling measures proposed by the Association.

Notice of intention or advance notice of self-regulatory measures, review time for the parties' statements and arguments, etc. are not included in the investigation or trial period of the case.

Article 69 After the case has been tried and the advance notification procedure (if any) has been completed, those who intend to take work measures or decide on self-regulatory management measures shall be submitted to the head of the association for examination and approval; where a disciplinary decision is to be made, in principle, it shall be submitted to the association president's office for collective discussion and decision.

At the end of the trial of the case, the Association delivered the handling decision to the parties by sending work notices, supervisory work letters, issuing announcements, or sending decisions on self-regulatory measures.

Article 70 Where a party is dissatisfied with the decision of the Association on self-regulatory measures, it may apply in writing for review within five working days after the Association issues the relevant notice or receives the decision on the self-regulatory measures. An application for review shall contain clear requests, facts and reasons.

The offline investor self-regulatory administration department shall, in principle, conduct a review within 15 working days from the date of receipt of the application for review, form a review opinion, and submit it for approval. The offline investor self-regulatory administration department may appoint a staff member to independently complete the case review work, and the reviewer must not also serve as an investigator or judge in the same case.

Cases reviewed by the Self-Disciplinary Committee shall be reviewed by the Self-Regulatory Disciplinary Committee. Cases reviewed by the offline investor self-regulatory administration department can be reviewed by the Self-Regulatory Commission after approval by the head of the association. The Self-Regulatory Commission shall complete the review and submit it for approval within 30 working days from the date of acceptance of the application for review. The review procedure of the Self-Regulatory Commission is carried out in accordance with the “Measures for the Implementation of Self-Regulatory Measures” and other relevant regulations.

The Association sends the results of the review to the parties concerned through self-regulatory review decisions, etc.

Article 71 Where the circumstances of a case are complicated or for other objective reasons it is necessary to extend the period of investigation, trial, or review, etc., it may be appropriately extended with the approval of the head of the association.

The time for offline investors or their staff, securities companies or their staff, complainants or whistleblowers, etc. to provide additional explanations or supporting materials is not included in the investigation, trial, review, etc. period of the case.

Article 72. The Association may conduct self-regulatory inspections and investigations on situations where offline investors, securities companies and their staff carry out offline inquiries and placement services for initial securities in accordance with the needs of self-regulatory management. Self-regulatory inspections and investigations can be carried out in the following ways:

(1) Require self-regulatory management targets to conduct self-inspections or make written explanations or promises;

(2) Entering the office or place of business subject to self-regulatory management to carry out inspections and investigations;

(6) Other methods that are lawfully necessary.

Offline investors, securities companies and their staff shall cooperate with the Association's self-regulatory inspections and investigations, and shall not refuse, delay, or provide untrue, inaccurate, or incomplete information for any reason.

After the on-site inspection or investigation enters the site, the Association shall send an integrity supervision card to the self-regulatory management target to inform the self-regulatory management target of the integrity supervision rights of the inspection and investigation work.

Article 73. Associations may deliver work notices, supervisory work letters, notices of intent for self-regulatory measures, decisions on self-regulatory measures, self-regulatory review decisions, self-regulatory inspection notices and other relevant documents by mail, fax, announcements, electronic systems, instant messaging tools, etc.

If the delivery target is an offline investor, the Association can deliver it through its lead underwriter participating in the initial securities project or a securities company recommended for registration. If the delivery target is an offline investor or securities company employee, the Association can deliver it through the offline investor or securities company. Relevant entities such as securities companies and offline investors shall promptly deliver to the delivery target and obtain delivery receipts.

Where electronic delivery is made to the delivery target, delivery is completed when the delivery information reaches the system where the electronic address such as an email address commonly used or reserved by the delivery target is located, unless the delivery target clearly indicates in advance that the relevant electronic address cannot be received. Proof of electronic delivery can be used as a delivery receipt.

Chapter 6 Supplementary Provisions

Article 74. The targets of self-regulatory management referred to in these rules refer to offline investors, securities companies, and their staff.

Article 75. Offline investors who have registered before the implementation of these Rules and their managed placement targets may participate in the offline inquiry and placement business of initial securities in accordance with the provisions of these Rules in accordance with their original business authority.

Article 76: The Association shall be responsible for interpreting these rules and shall take effect from the date of publication.

This article was selected from the official website of “China Securities Association”. Zhitong Finance Editor: Jiang Yuanhua.