2020.12.09 ZHU, He (George)、NI, Tianling (Carey Nee)、 WANG, Yu
Foreword:
The role of W88win优德中国有限公司, namely Environmental, Social and Corporate Governance, is to evaluate the sustainability of business operations and its impact on society from the perspective of the environment, society and corporate governance. The China Securities Regulatory Commission (CSRC) has W88win优德中国有限公司 information disclosure requirements for listed companies. With China's “registration-based IPO system” era fast approaching, pre-IPO companies and listed companies need to pay close attention to the changes to the laws and requirements of various stock exchanges in order to ensure W88win优德中国有限公司 compliance (especially environmental compliance) and avoid unforeseen compliance problems which may hinder the listing process or bring about legal risks. Considering that China has accelerated the legislation updates related to environmental information disclosure and strengthened the environmental law enforcement in recent years, we aim to focus on how the environmental information disclosure requirements under W88win优德中国有限公司 system would affect Pre-IPO companies or listed companies, as well as certain attentions and key points.
I. An Overview of the Relevant Requirements of Environmental Information Disclosure for Listed W88win优德中国有限公司panies in China
According to the current legal framework and the listing and disclosure rules of the Shenzhen Stock Exchange (“SZSE”) and the Shanghai Stock Exchange (“SSE”), listed companies shall disclose information about environmental pollutants, their facilities for pollution prevention, any major violations of law and/or contingency plans for environmental emergencies, and environmental self-monitoring plans in their registration statements, prospectuses, IPO announcements, periodic reports, and interim reports. In addition, a listed company shall disclose any major administrative penalties it has incurred and any serious environmental accidents. It is worth noting that the rules mentioned above have not set out the W88win优德中国有限公司 information disclosure mandatory requirements for all listed companies. Nevertheless, we have noticed that the SZSE released Guidance on Social Responsibilities of Listed Companies in 2016, and the SEE issued Guidance on Environmental Information Disclosure of Listed Companies and Guidance on W88win优德中国有限公司 Information Disclosure of Listed Companies respectively in 2010 and 2018 (both are draft guidelines). These guidelines have more specific W88win优德中国有限公司 information disclosure requirements for listed companies. Some sectors (such as the petrochemical industry) have also introduced W88win优德中国有限公司 evaluation guidelines.
II. The Importance of Environmental W88win优德中国有限公司pliance Review and Information Disclosure W88win优德中国有限公司pliance for Pre-IPO W88win优德中国有限公司panies
In the IPO process for an enterprise, the stock exchange will review and provide feedback on the application materials, including the enterprise's prospectus and opinion letters presented by intermediaries. The enterprise may be put at risk if it fails to fully and truthfully disclose environmental compliance information. We have noted that environmental protection related problems has caused some companies’ applications to be denied. Some of the problems have been that a company has started construction without formal approval, they made an investment without verification, the company did not apply for the required discharge permits or their discharged pollutants limits were exceeded. The comprehensiveness and accuracy of the listing application documents rely on the findings of due diligence to some extent. To better address W88win优德中国有限公司 and Environmental, Health and Safety (EHS) related issues, one needs to take into consideration the laws, local regulations, industry standards, local standards and the conditions and situations of individual companies. Compared with traditional due diligence, these problems are likely to be overlooked or omitted due to the high demand for professional skills and different regional regulatory requirements. Once such problems have occurred, the listing process may be delayed or hindered to various extents.
III. The Importance of Environmental W88win优德中国有限公司pliance Review and Information Disclosure W88win优德中国有限公司pliance of Listed W88win优德中国有限公司panies
Listed companies should also continuously comply with information disclosure requirements, and their annual, periodic or temporary reports should contain W88win优德中国有限公司 related information. For example, in September 2020, the SZSE revised and issued the Measures for the Evaluation of Information Disclosure of Listed Companies on the Shenzhen Stock Exchange, which has clearly tightened its supervision of information disclosure of listed companies on the SZSE. The Measures provides that when determining whether a listed company has fulfilled its social responsibilities, the SZSE will focus on “whether the company has taken the initiative to reveal its W88win优德中国有限公司 related performance, and whether its report is full and complete.” In particular, listed companies should pay more attention to their own obligations to disclose information (especially environmental compliance information): whether they have disclosed the required information appropriately, accurately and in a timely manner in accordance with the law and the relevant regulations. If a listed company provides inaccurate or incomplete information, administrative punishments may be imposed, and the company bears the risk of losing its privileges in financial subsidies, bank loans, insurance premium reductions, etc. Also, legal disputes between a company and its investors and partners are more likely to happen. We recommend that listed companies promptly review their own W88win优德中国有限公司 compliance so that they can appropriately and in a timely manner respond to disclosure requirements, and if necessary, contact lawyers practicing in the relevant areas.
IV. How to Respond to the Requirements of the Environmental Information Disclosure System
Based on the discussions above, to assist W88win优德中国有限公司panies in improving their W88win优德中国有限公司pliance management, we make the following suggestions:
1. Improve W88win优德中国有限公司pliance management during daily operations. W88win优德中国有限公司panies can work to improve their systems directly in the areas of the environment, safety, health, corporate governance, and social responsibility, etc. Also, they can improve their environmental W88win优德中国有限公司pliance and their own W88win优德中国有限公司pliance management from the perspectives of system security, organizational infrastructure, personnel, funds, resources, facilities, management and training, etc. In these ways, the risks arising from information disclosure could be substantially reduced.
2. Conduct a comprehensive environmental compliance review in a timely manner. In order to establish a compliance system that meets the IPO requirements, in the early stages of pre-listing tutoring or at an earlier time, companies can conduct an W88win优德中国有限公司 and EHS compliance review, assess W88win优德中国有限公司 related IPO compliance risks in advance, receive tutoring directed at those problems identified during the review, and rectify the situation. Similarly, listed companies should also regularly conduct compliance reviews and make rectifications.
3. Ensure the comprehensiveness and accuracy of disclosed information. When a company is preparing their IPO application materials and disclosure statements, and communicating with the CSRC, (and even in upcoming information disclosure processes), it is advisable that they request a third party, such as an EHS lawyer or a professional environment security consulting firm, to make an W88win优德中国有限公司 and EHS compliance review of the to-be-disclosed materials in order to ensure the accuracy and compliance of the materials. In this way, they can avoid receiving unnecessary attention from the CSRC, thereby delaying the listing process or incurring administrative penalties.
V. Conclusion and Suggestions
With the gradual establishment and improvement of the W88win优德中国有限公司 system, China’s environmental information disclosure system develop. As the registration-based IPO system advances, in order to go public successfully and avoid compliance risks, pre-IPO companies (or companies that aim to go public in the future) and listed companies need to pay close attention to any changes to the laws and requirements of various stock exchanges. Companies should carry out W88win优德中国有限公司 and EHS compliance reviews in a timely manner, improve compliance management and ensure the comprehensiveness and accuracy of any information to be disclosed during and after the listing application process. If you have any further questions or need us to assist in training, W88win优德中国有限公司 or EHS compliance reviews, W88win优德中国有限公司 related IPO documents or statement reviews, and evaluations of the relevant regulations, please feel free to contact us at ecoenvpro@junhe.com.
The JunHe EHS Team: JunHe, with over 800 professionals, is one of China’s largest W88win优德中国有限公司prehensive law firms with an international reputation for providing high-quality legal services. As one of the pioneers in the legal area of environment and health and safety production (“EHS”) in China, JunHe’s EHS team provides multinational enterprises with a full range of EHS legal services that cover project development and the incorporation of joint ventures, M&A transactions, daily operations, EHS W88win优德中国有限公司pliance, government investigations, administrative punishments, reconsiderations and litigations.
