20 ASIAN LEGAL BUSINESS CHINA • 亚洲法律杂志-中国版 SEPTEMBER 2023 the same time, stock exchanges and other relevant agencies all issued supporting rules for implementation, covering aspects such as issuance conditions, registration procedures, sponsorship and underwriting, major asset restructuring, regulatory law enforcement and investor protection. All of these developments will naturally have an impact on the work of IPO lawyers,” shares Zhang. According to him, the rules with the biggest impact include those on “streamlining and optimizing the conditions for issuance and listing,” “improving review and registration procedures,” “improving the system for major asset restructuring of listed companies,” and “further reinforcing regulatory law enforcement and investor protection.” In addition, at its core, “the registration-based IPO reform is to hand over the right of choice to the market. At the same time, regulators are tightening the role of issuers as the parties primary responsible for information disclosure and the responsibilities of intermediaries as gate keepers,” explains Zhang. “Against this backdrop, the new system has raised higher requirements on the professional competency and practice quality of IPO lawyers. Accordingly, the practice risks of IPO lawyers have also increased.” Xu has also noticed changes in lawyers’ work given the new concept of the registration-based IPO system and its detailed rules. “First, the pace of work has become more intense. The new IPO system has significantly shortened the approval queue and issuance cycle, posing bigger challenges to lawyers’ work pace and response speed. In the past, lawyers could spend time in slowly polishing many projects, but now work is results oriented. In addition, the registration-based IPO system emphasizes information disclosure and its completeness, authenticity and accuracy, which means that lawyers must rely on limited time and energy to meet higher requirements.” He also sensed the strengthening of lawyers’ responsibilities. “The CSRC has released the Detailed Rules on the Practice of Law Firms for Engaging in Services of the Initial Public Offering and Listing of Shares, which not only clarify the scope of responsibilities, due diligence requirements, etc., but also put forward higher requirements on the compliance and improvement of the internal control systems of securities law firms.” “On the whole, although the number of successful IPOs has decreased in the first half of the year, securities lawyers have been kept busy and are in fact under greater pressure than before,” concludes Xu. MORE RESOURCES With the increasing responsibility and pressure of IPO lawyers, Xu says that firms practicing securities law have invested more tangible resources and energy to “strengthen risk control, including significant investment in IT and human resources in the face of prior inspection and post accountability by regulators.” Specifically, “we have done work in several fronts. First, all the work outputs of lawyers, including information disclosure documents and working papers, need to be better and more comprehensively organized internally. Second, most larger securities law firms are in contact with top IT companies to explore the integration of AI tools and securities legal services, hoping to leverage powerful tools to complete some of the work so as to improve efficiency and save manpower.” “Third, we are also exploring the possibility of institutional innovation with some leading insurance companies. For example, one insurance company may soon launch a product that targets IPO issuers. If an IPO project causes the issuer and intermediaries to bear liabilities for civil compensation due to specific reasons, this event may be claimable by the insurance company.” In addition, non-governmental associations and organizations, including securities and lawyers’ industry associations, “are also working around-theclock to formulate standards.” Under the registration-based IPO system, several securities disputes involving intermediaries bearing joint and several liabilities in the first half of the year have triggered keen market concern. Zhang believes that securities lawyers should put more risk prevention measures in place. “First is to focus on business screening and control project quality throughout. Before accepting a project, lawyers should already conduct preliminary investigation and risk analysis. During a project, lawyers should design work processes based on the project’s characteristics and industry attributes, and continuously track, manage, and serve project operations. Upon completion of a project, lawyers should review work outputs to ensure no quality issue.” “Second is to improve the construction of internal control and compliance. Third is to focus on building up professional competency and comprehensively improve the quality of practice. Fourth is to strengthen professional ethics and CAPITAL MARKETS “Regulators and other parties are still finding their feet under the registration-based IPO system, and therefore one should view some of the happenings on the market rationally and have more patience and confidence in the market.” — Xu Jianjun, DeHeng Law Offices “全面注册制下市场主体和监管多 方磨合仍在继续，应理性看待部分 现象，给予市场更多耐心和信心。” — 徐建军，德恒律师事务所
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