TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issu...
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Reuters in Shanghai
06 July 2011
China’s securities regulator has tightened its approval requirements for initial public offerings by companies in some industries seen as having high risks of financial irregularities, including restaurants and chain stores, industry sources told reporters.
The tightened requirements, not officially announced but communicated to investment bankers involved in IPO plans, have been ratcheted up over the past couple of months, said four sources with direct knowledge of the changes.
While there was no clear signal from Beijing on the reason behind the changes, at least some of the steps appear to have happened in the wake of accounting scandals among some Chinese companies listed overseas, which have cast a spotlight on weaknesses in Chinese corporate governance.
“China’s restaurants and franchise operators are often murky in their accounting practices, so regulators are tightening listing rules to make sure their reported profit growth is sustainable and that there are no unhappy surprises after flotation,” said one of the sources, who declined to be identified.
Around two months ago, the China Securities Regulatory Commission (CSRC) raised the requirement for annual profits for restaurant operators seeking IPOs to 50 million yuan (US$7.7 million) from 30 million yuan, one of the sources said.
The CSRC then heightened its scrutiny over restaurant IPOs in the past month or so, one investment banking source said, while another banking source said the focus on accounting issues surrounding franchise-style chain stores had come about in the last two weeks.
Among the affected companies, the listing application by South Beauty, a Beijing-based restaurant chain operator that had been planning to list in Shenzhen, has been shelved by the CSRC, two people with direct knowledge of the deal said.
That was not related to any specific concerns about South Beauty’s accounting practices, they added.
UBS was advising South Beauty on the planned listing.
A spokesperson at the CSRC declined to comment when contacted by Reuters. A South Beauty spokeswoman was not immediately available for comment.
The Chinese securities regulator has not come out with any formal response to the accounting scandals among some North American-listed Chinese firms, which have rocked investor confidence in Chinese firms among investors there.
However, a few local media reports have hinted the CSRC was taking some action to address such issues.
The CSRC last month held a meeting with securities industry executives urging them to exercise extra caution when handling IPOs from certain industries, especially those with a relatively short history, unusually rapid expansion or high turnover rates of stores, the 21st Century Business Herald reported last Friday.
Some restaurants have been known to avoid paying tax by not issuing sales receipts to customers, a practice many local governments have addressed by introducing incentives for customers to ask for receipts, such as lottery-type prizes on receipts.
The CSRC has thrown out around two dozen IPO applications since March, according to Reuters calculations, compared with only a handful in the first couple of months of the year.
Many of the rejected plans were for IPOs on the Shenzhen Stock Exchange, in a range of sectors including biotech, materials, agriculture and pharmaceuticals.
Shenzhen hosts the ChiNext market - a start-up board dubbed as China’s answer to the Nasdaq - as well as a small- and medium-sized enterprise (SME) board for smaller companies.
The number of listed companies in Shenzhen has increased by more than half to over 1,300 from close to 850 in 2009, exchange data showed.
The tightening of restrictions comes as more companies outside the financial and industrial sectors look to list and to tap what has been a booming primary market in Shenzhen, including snack food retailer Shanghai Laiyifen Co and foot massage chain Liangzi.