CSRC: Listed companies should raise funds and use them for specific purposes. In principle, the funds should be used for core business operations.

Recently, the China Securities Regulatory Commission issued the "Regulations on the Supervision of Funds Raised by Listed Companies", which mentioned that funds raised by listed companies should be used for specific purposes. The use of funds raised by listed companies should comply with national industrial policies and relevant laws and regulations, adhere to sustainable development concepts, fulfill social responsibilities, and primarily be used for core operations to enhance the company's competitiveness and innovation capabilities. Except for financial enterprises, funds raised cannot be used for holding financial investments or directly or indirectly investing in companies whose main business is trading securities. The above-mentioned "Regulations" will be implemented starting from June 15, 2025. The original text is as follows: Regulations on the Supervision of Funds Raised by Listed Companies Article 1 In order to strengthen the supervision of funds raised by listed companies and improve the efficiency of fund utilization, these rules are formulated in accordance with the "Securities Law of the People's Republic of China," "Provisions on the Administration of Issuance of Stocks for Initial Public Offering," "Provisions on the Administration of Securities Issuance Registration of Listed Companies," "Provisions on Information Disclosure of Listed Companies," and other regulations. Article 2 These rules apply to the monitoring of funds raised by listed companies through the issuance of stocks or other equity securities to investors for specific purposes, excluding funds raised for equity incentive plans. Article 3 Funds raised by listed companies should be used for specific purposes. The use of funds raised by listed companies should comply with national industrial policies and relevant laws and regulations, adhere to sustainable development concepts, fulfill social responsibilities, and primarily be used for core operations to enhance the company's competitiveness and innovation capabilities. Except for financial enterprises, funds raised cannot be used for holding financial investments or directly or indirectly investing in companies whose main business is trading securities. Companies listed on the Science and Technology Innovation Board should invest funds raised in the field of technological innovation to promote the development of new productive forces. For specific guidelines on the application of the Regulations Applicable Guidelines - Listed Class No. 1, refer to the relevant provisions of the information disclosure opinions on the application of the provisions related to financial investments in the issuance and registration management of listed company securities. Article 4 Listed companies should establish and improve internal control systems for the deposit, management, use, change of use, supervision, and accountability of funds raised, clearly defining the hierarchical approval authority, decision-making processes, risk control measures, and information disclosure requirements for the use of funds raised, to standardize their utilization. The board of directors of a listed company should continuously monitor the deposit, management, and utilization of funds raised, effectively prevent investment risks, and improve the efficiency of fund utilization. Article 5 The controlling shareholders, actual controllers, and other related parties of listed companies may not occupy the funds raised by the company, or use the funds to invest in projects to obtain undue benefits. If a listed company discovers that its controlling shareholders, actual controllers, and other related parties have occupied the raised funds, they should promptly request repayment, disclose the reasons for the occupation, the impact on the company, the rectification plan, and the progress of rectification. Article 6 Directors and senior management of listed companies should diligently fulfill their duties to ensure the safety of funds raised by the company, and may not manipulate the funds to change their purpose arbitrarily or indirectly. Article 7 Listed companies should deposit the raised funds in a special account established with the approval of the board of directors for centralized management and use, and within one month of the arrival of the funds, sign a tripartite supervision agreement with the sponsor institution and the commercial bank holding the funds. After the signing of the relevant agreement, listed companies can use the raised funds. The special account for raised funds should not store non-raised funds or be used for other purposes. If raised funds are to be invested in overseas projects, in addition to meeting the requirements of the first paragraph, listed companies and sponsoring institutions should take effective measures to ensure the safety and proper use of funds invested in overseas projects, and disclose specific measures and actual effects in the "Special Report on the Deposit, Management, and Actual Use of Company Raised Funds." Article 8 Funds raised by listed companies should be used for the purposes listed in the prospectus or other public fundraising documents and may not change their purpose arbitrarily. If any of the following circumstances occur, it is considered a change in the use of raised funds, and the board of directors should make a resolution in accordance with the law, the sponsor institution should express a clear opinion, and the shareholders' meeting should review the relevant information in a timely manner and disclose it: (1) Cancelling or terminating the original investment project of raised funds, implementing new projects, or permanently supplementing working capital; (2) Changing the subject of the investment project of raised funds; (3) Changing the implementation method of the investment project of raised funds; (4) Other circumstances recognized by the China Securities Regulatory Commission. If a listed company falls under the circumstances specified in (1) above, the sponsor institution should explain in detail the main reasons for the change in the investment project of raised funds in combination with the previous disclosure of relevant fundraising documents. If the subject of the investment project of raised funds changes between the listed company and its wholly-owned subsidiary, or only involves a change in the location of the investment project, it is not considered a change in the use of raised funds. The relevant changes should be made by the board of directors, without the need for shareholder approval, the sponsor institution should express a clear opinion, and the listed company should disclose the relevant information in a timely manner. If a listed company uses raised funds in violation of the provisions of Article 11, Article 13, and the second paragraph of Article 14 of these rules, exceeding the amount and term determined by the board of directors approval process, the company will be considered to have changed the use of raised funds without authorization. Article 9 If a raised funds investment project is estimated to be unable to be completed within the original deadline, and the listed company plans to postpone the implementation, it should be submitted to the board of directors for approval in a timely manner, and the sponsor institution should express a clear opinion. The company should promptly disclose the specific reasons for the delay, the current status of the funds deposited and accounted for, and whether there are any adverse effects on the planned use of the raised funds.The situation of continuous progress, expected completion time, phased investment plan, and measures to ensure on-time completion in case of delays.Article 10 If any of the following situations occur in the investment projects funded by the raised funds, the listed company should promptly re-evaluate the feasibility, expected returns, etc. of the project and decide whether to continue its implementation: (1) Significant changes in the market environment related to the investment project of the raised funds; (2) The time for the investment project of the raised funds to be put on hold exceeds one year after the funds are raised; (3) The completion deadline of the investment plan for the raised funds is exceeded and the amount of funds invested does not reach fifty percent of the planned amount; (4) Other abnormal situations occur in the investment project of the raised funds. If a listed company has the situations specified in the preceding paragraph, it shall promptly disclose them. If adjustments to the investment plan for the raised funds are needed, the adjusted investment plan should be disclosed at the same time. If there are changes to the investment project of the raised funds, the relevant review procedures for changing the use of the raised funds shall apply. Listed companies should disclose the specific circumstances of the re-evaluation of the investment projects in the most recent periodic report. Article 11 Listed companies may manage temporarily idle raised funds, and the cash management should be implemented through a special account for the raised funds or a publicly disclosed product-specific settlement account. If cash management is carried out through a product-specific settlement account, this account must not hold non-raised funds or be used for other purposes. Cash management should not affect the normal implementation of the investment plan for the raised funds. Cash management products should meet the following conditions: (1) They should be safe products such as structured deposits and large certificates of deposit, and should not be non-principal-guaranteed; (2) They should have good liquidity, with a maturity period not exceeding twelve months; (3) Cash management products should not be pledged. If a listed company uses temporarily idle raised funds for cash management, it should be approved by the board of directors, with the sponsor institution issuing a clear opinion, and the company should promptly disclose the following information: (1) Basic information about the raised funds, including the fundraising period, amount of raised funds, net amount of raised funds, and investment plans; (2) Usage of the raised funds; (3) The amount and period of cash management, whether there are actions that change the purpose of the raised funds in disguise, and measures to ensure that the normal execution of the investment project for the raised funds is not affected; (4) The distribution method, scope of investment, and safety of the cash management products; (5) Opinion issued by the sponsor institution. Article 12 If the use of temporarily idle raised funds for cash management by a listed company may harm the interests of the company and investors, relevant information and measures to be taken should be disclosed promptly. Article 13 Listed companies may temporarily use idle raised funds to supplement working capital. The maximum duration for a single temporary working capital supplement should not exceed twelve months. The temporary working capital supplement should be carried out through a special account for the raised funds and should be limited to production and operational activities related to the main business. The amount, duration, and other matters of using temporarily idle raised funds for temporary working capital should be approved by the board of directors, with the sponsor institution issuing a clear opinion, and the company should promptly disclose relevant information. Article 14 According to the company's development plan and actual production and operational needs, a listed company should properly arrange the use plan for the portion of actual net raised funds exceeding the planned amount of raised funds (referred to as excess raised funds). Excess raised funds should be used for projects under construction or new projects, share repurchases by the company, and legal cancellation. The specific usage plan for excess raised funds should be clearly defined no later than when the overall completion of the batch of fundraising and investment projects, and should be executed according to the plan. The use of excess raised funds should be decided by the board of directors in accordance with the law, the sponsor institution should issue a clear opinion, and it should be submitted to the shareholders' meeting for review. The company should promptly and fully disclose the necessity and reasonableness of using excess raised funds. If the excess raised funds are used for investment in projects under construction or new projects, relevant information such as the construction plan, investment period, and return rate of the projects should also be fully disclosed. If it is necessary to use temporarily idle excess raised funds for cash management or temporary working capital, the necessity and reasonableness should be explained. The amount, duration, and other matters of using temporarily idle excess raised funds for cash management or temporary working capital should be approved by the board of directors, with the sponsor institution issuing a clear opinion, and the company should promptly disclose relevant information. Article 15 If a listed company uses its own funds to invest in a raised funds investment project in advance and then replaces the self-raised funds with the raised funds after they are in place, it should be implemented within six months after the raised funds are transferred to the special account. During the implementation of the raised funds investment project, payments should generally be made directly with the raised funds. However, in cases where it is difficult to make direct payments with the raised funds for items such as salaries for employees and purchases of foreign products and equipment, the replacement can be implemented within six months after payment with self-raised funds. The replacement of raised funds should be approved by the board of directors of the listed company, with the sponsor institution issuing a clear opinion, and the company should promptly disclose relevant information. Article 16 Listed companies should truthfully, accurately, and completely disclose the actual use of the raised funds. The board of directors should comprehensively review the progress of the raised funds investment projects every half-year period, prepare a special report on the "Company's Raised Funds Deposits, Management, and Actual Use" and disclose it. The relevant special report should include the basic information of the raised funds and the storage, management, and usage as specified in these rules. If there are differences between the actual investment progress of the raised funds investment projects and the investment plan, the listed company should explain the specific reasons. Article 17 Sponsor institutions should continuously supervise the storage, management, and use of the raised funds by listed companies in accordance with the "Measures for the Administration of Securities Issuance and Listing Sponsorship." If any abnormal situations are found during the continuous supervision, on-site inspections should be carried out promptly. Sponsor institutions should conduct on-site inspections of the storage, management, and use of the raised funds by listed companies at least once every half-year period. If any abnormal situations are found during the continuous supervision and on-site inspections, they should promptly report to the regulatory authorities and stock exchanges. After the end of each fiscal year, sponsor institutions should issue a special inspection report on the storage, management, and use of the raised funds by listed companies and disclose it."Bonjour, comment a va aujourd'hui?" "Hello, how are you today?"When the accounting firm conducts annual audits, it should issue an audit report on the deposit, management, and use of funds raised by listed companies. Listed companies should cooperate with the continuous supervision and on-site inspections of the sponsoring institutions, as well as the audit work of the accounting firm, and promptly provide necessary information on the deposit, management, and use of funds raised or apply to the bank for such information. Article 18 The securities exchanges shall conduct self-regulation of the management and use of funds raised by listed companies and carry out regulatory inquiries as needed; if violations are found, corresponding self-regulatory measures or disciplinary actions shall be taken in accordance with relevant rules. Article 19 The China Securities Regulatory Commission and its branches shall hold accountable those who violate the Securities Law, the Measures for the Administration of the Disclosure of Information of Listed Companies, and the Measures for the Administration of Securities Issuance and Listing Sponsorship Business if they engage in the following behaviors: (1) Listed companies and their relevant personnel fail to disclose the use of funds raised as required, or the disclosed information does not match the actual deposit, management, and use of the funds raised; (2) Sponsoring institutions and their relevant personnel fail to diligently supervise the continuous use of funds raised by listed companies; (3) Accounting firms and their relevant personnel do not diligently fulfill their duties in the verification of the use of funds raised by listed companies. Article 20 If a listed company and its relevant personnel violate the provisions of these rules by changing the use of funds raised without authorization, the China Securities Regulatory Commission and its branches shall impose penalties in accordance with Article 185 of the Securities Law. Article 21 In cases of negligence in the supervision of funds raised by listed companies, which result in significant losses, serious consequences, or negative impacts, strict accountability shall be enforced in accordance with regulations and disciplinary actions. Article 22 These rules shall be implemented from June 15, 2025. The "Regulatory Requirements for the Management and Use of Funds Raised by Listed Companies" (CSRC Announcement [2022] No. 15) issued on January 5, 2022, is hereby repealed. This article is adapted from the "China Securities Regulatory Commission Official Website", edited by Xu Wenqiang.