The China Securities Regulatory Commission, alongside the Ministry of Justice and the Ministry of Finance, published an explanatory Q&A on new State Council provisions regulating how intermediaries charge and operate when providing services for companies’ domestic public issuance of shares. The framework seeks to reduce conflicts of interest and incentives for misconduct by tightening conduct requirements and restricting fee arrangements that hinge on issuance or listing outcomes. The provisions apply to securities firms, accounting firms, law firms and other intermediaries in connection with fee-charging and related activities for onshore public share offerings. Intermediaries must act with integrity, diligence and independence, staff engagements with appropriately qualified professionals, and maintain conflict-of-interest review and other risk-control systems; they are also prohibited from assisting financial fraud, fraudulent issuance or unlawful disclosure, and their working papers and issued documents must not contain false records, misleading statements or material omissions. Fees must follow market-based principles and be set reasonably with reference to workload and resource inputs, with sector-specific restrictions including a ban on sponsorship and audit fees being conditioned on audit results or issuance and listing outcomes, a prohibition on underwriting fee ratios increasing with issuance size, and a requirement for law firms to charge uniformly and in line with relevant government rules on legal service fees; local governments are barred from awarding issuers or intermediaries for listing-related outcomes, with improper awards made after the rules take effect subject to clawback. The provisions take effect on 15 February 2025, and the CSRC, Ministry of Finance and Ministry of Justice will coordinate on implementation through training, routine supervision and targeted enforcement inspections focused on intermediary fee practices and other compliance obligations.

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