A Research On The Sponsor System

In order to improve the general quality of listed companies, and to promote the sound development of China's capital market, China Securities Regulatory Commission (CSRC) adopted the sponsor system.In April 2004, The Interim Measures for the Sponsor System came into force; therefore the sponsor system was formally established in China. It symbolizes a significant change in China's securities offerings & listings system, and there are wide expectations that the sponsor system will eradicate all the malpractices long plagued China's securities market. However, disputes concerning the effectiveness of the sponsor system remain in the following years.This paper conducts an all-round research on China's sponsor system, and the basic logic is analyzing the current situation-discovering the problems-comparison-further analyzing- putting forward conclusions and proposals. Except for Introduction and Conclusions and Proposals, this paper includes 4 chapters.Chapter 1 introduces the concept of the sponsor system and its origin, discusses the three values of the sponsor system, and finally this chapter takes a survey of the development of the system in China.Chapter 2 The Legal Status of the Sponsor discusses the four duties of the sponsor, i.e. the duty of recommendation, the duty of tutoring, the duty of supervision, and the duty of guaranteeing, as well as the sponsor's legal liability. In the end, this chapter compares the liability of the sponsoring institution and the sponsoring representative, analyzes the relations between the sponsor and other market intermediaries, between the sponsor and the regulator.Chapter 3 analyzes the current situation of China's sponsor system from both the statute and case perspective, to the end of revealing the imperfections embedded in the system.Keeping in mind the sponsor system was originated from the UK and further evolved in Hong Kong, chapter 4 takes a survey on the sponsor system in the UK and in Hong Kong respectively and draws lessons for China's practices.In the last part, Conclusions and Proposals, the author suggests to strengthen the liabilities of the sponsor; to raise the threshold of the sponsor's qualifications; to extend the sponsor's supervising period; and to clarify the sponsor's liability scope.