China Securities Regulatory Commission publishes State Council rules on IPO intermediaries including a ban on outcome-based fees for sponsors and auditors

The China Securities Regulatory Commission published the State Council’s regulation governing intermediary institutions that provide services for companies’ public issuance of shares, effective 15 February 2025. The measures set conduct and charging standards for IPO-related intermediaries and establish coordinated supervision and enforcement involving securities, finance and justice authorities. Intermediaries must act with honesty and diligence and remain independent and objective, and are prohibited from assisting issuers with financial fraud, fraudulent issuance or unlawful information disclosure. Documents they prepare or issue must not contain false records, misleading statements or material omissions. Fees must follow market-based principles and reflect workload and resource inputs, with securities firms’ sponsorship services and accounting firms’ audit services prohibited from making fees conditional on the outcome of an IPO and listing, while law firms must charge in line with relevant government rules on legal service fees. Supervisors may share information, coordinate oversight and conduct joint on-site inspections where necessary, with administrative penalties for intermediaries and staff including warnings, fines and suspension from relevant business, and warnings and fines for breaching issuers and their controlling shareholders or actual controllers. Officials from the Ministry of Justice, the Ministry of Finance and the CSRC also issued a Q&A alongside the regulation.