Goodbye, "Dinner Party IPO"
In the first half of this year, the fierce scramble for sponsor representatives at high premiums in Hong Kong is still fresh in people's memory.
At that time, some investment banks offered a monthly salary of HK$200,000 to recruit sponsor representatives but still could not find a single candidate, and some securities firms even did not hesitate to pay a high "payment in lieu of notice" to poach a sponsor representative.
The boom of the Hong Kong stock market has made the sponsors who can sign on IPO documents a scarce resource. However, there are only 300 to 350 sponsor representatives still active on the Hong Kong Stock Exchange.
Different from the high-salary expansion of the sponsor representative business in Hong Kong, the resignation of sponsor representatives at mainland securities firms has become increasingly common.
According to the official website data of the Securities Association of China, by the end of 2025, the number of sponsor representatives in the whole industry was 8,526; the latest data disclosed by the association shows that by the end of June 2026, the number of sponsor representatives has dropped to 8,153, a decrease of 4.4% compared with the end of last year, and the streamlining of the sponsor representative team has further accelerated.
In recent years, the regulatory authorities have continuously emphasized the implementation of the responsibilities of intermediary institutions, and at the same time encouraged securities firms to accelerate merger and reorganization. The industry has entered a new development stage of improving quality and efficiency.
Just recently, the Securities Association of China has newly drafted the Code of Practice for Sponsor Representatives and is soliciting opinions from the industry.
The new regulation requires that in the processes of project declaration, review and registration, sponsor representatives shall not have any private contact with regulatory staff in addition to normal work communication, shall not instigate, instruct or assist others in interfering with the review by improper means, and shall not "hunt" regulatory staff through means such as benefit transmission and bribery.
Against the background of stricter supervision, sponsor representatives are facing more stringent tests of professional quality.
The new regulation is on the way
On October 9, the Securities Association of China organized and drafted the Code of Practice for Sponsor Representatives (Exposure Draft) (hereinafter referred to as the "Exposure Draft"), and is currently soliciting opinions from the industry.
The Exposure Draft not only mentions that sponsor representatives shall not "hunt" regulatory staff in the processes of project declaration, review and registration, but also clearly prohibits excessive packaging and hype of "star sponsor representatives".
The so-called star sponsor representative refers to the person who signs when promoting the project to be listed, and is also the name that appears on the last few pages of the prospectus.
In the past, star sponsor representatives had certain influence on enterprises. At private dinner parties, they might hint how strong their connections were, so as to attract enterprises.
The new regulation clearly stipulates that sponsor representatives and other personnel engaged in sponsor business shall not slander peers, make unreasonable quotations, claim to be familiar with regulatory personnel or other relevant personnel, promise to lower the business standards of due diligence, information disclosure and internal control, promise the time of declaration and registration, promise the issue price, or sign drawer agreements in the process of project contracting.
It is worth noting that one of the biggest highlights of this new regulation is to draw a clear boundary for clean practice.
In terms of prohibiting the transmission of improper benefits, the new regulation clearly defines a number of high-voltage lines by enumeration. Sponsor representatives shall not provide money, gifts, real estate, automobiles, negotiable securities and other property to public officials, customers, potential customers under negotiation or other stakeholders, or provide benefits such as travel, entertainment, fitness and job arrangement;
Shall not directly or indirectly provide insider information, undisclosed information, customer information and trade secrets;
Shall not sign agreements with fictitious service subjects or content, or use the assets of the institution and its customers to pay consultation fees, consultant fees and service fees to third parties that do not have professional capabilities and have not provided corresponding services.
In the past, those improper behaviors have begun to be strictly prohibited.
The Golden Age of Sponsor Representatives
Speaking of sponsors, the story dates back to 2004.
In this year, the sponsor system was implemented. Initially, there were only a hundred practitioners with sponsor qualifications. Rare things are precious. Whoever has more quotas in hand is the top investment bank.
In those days, the salary system design of sponsor representatives was the core secret of every investment bank, which was also their core weapon to retain sponsor representatives.
On October 30, 2009, the ChiNext market was launched, and the first batch of 28 companies were listed on the same day. The signatories behind them became famous after the first battle. Some young people earned tens of millions of assets in one or two years with one or two projects. From around 2007 to 2011, this period is still called the "Golden Age" in the industry.
In 2011, *Money Week* once made a calculation. Only counting the 100 elite sponsor representatives behind IPO projects, their average annual salary in 2010 was 6.08 million yuan, of which 41 sponsor representatives had an annual salary of more than 5 million yuan, and the lowest was 2.58 million yuan. According to the aforementioned calculation, last year there were 8 sponsor representatives with an annual salary of more than 10 million yuan, of which 4, half of them, came from Ping An Securities. Among them, 3 people had 3 signed projects in that year.
There are always shadows behind the golden age.
Scarcity brings power, and power brings temptation.
Around 2010, according to public reports at that time, several well-known sponsor representatives had accidents one after another: some used undisclosed information in the project to conduct insider trading; some asked their relatives or "shadow companies" to hold shares on their behalf and quietly invest in shares before the company went public, and then cash out after the shares were lifted from the ban. Some had their qualifications revoked and were banned from the industry for life, some were transferred to judicial organs, and some once fled overseas.
For a long time, in order to ensure that projects pass the review smoothly and get on the "fast track of listing", some investment banks and sponsor representatives are easy to take the gray path.
Some people treat guests and give gifts, arrange consultation fees, and even pull relevant personnel into "shadow companies" and "holding platforms" to transmit benefits. There are also people who sat on one side of the review table yesterday, and tomorrow they will sit in the conference room of securities firms or law firms. Some departed personnel rely on their original contacts to collude privately and communicate in advance.
As time goes by, the quota for sponsors has been liberalized, the number of examinations has increased, and registration has been simplified. The number of sponsor representatives has risen from a few hundred to more than 3,000, and the premium of the license has been diluted. At the same time, policies such as "responsibility starts upon declaration" and "lifelong accountability" have been implemented one after another. Sponsor representatives have fallen from the throne of "only getting paid without taking responsibility" to the doorkeeper of "high risk and heavy responsibility".
Under the full registration system, the policy requires taking information disclosure as the core, and sponsor representatives shall earnestly do a good job in due diligence and hold the "first pass".
But even so, there are still some people who want to "communicate a little" and "say hello" to bring problematic projects through. When encountering abnormal financial data of enterprises and historical legacy defects, some practitioners do not urge enterprises to rectify or dissuade them decisively, but seek to "communicate and say hello" with the reviewers, trying to lower the review red line and force the problematic projects to pass the review.
Now, the drafting of the new regulation is precisely to clean up these phenomena.
The Price of a Meal
In the past, a meal might be the beginning of a project.
A few days ago, the Code of Practice for Sponsor Representatives drafted by the Securities Association of China is soliciting opinions from the industry, and this kind of private meal has been explicitly written into the restricted zone. The new regulation requires that in the processes of project declaration, review and registration, sponsor representatives shall:
Shall not have private contact with regulatory staff in addition to normal work communication;
Shall not instigate, instruct or assist others to interfere with the review by improper means;
Shall not "hunt" regulatory staff through means such as benefit transmission and bribery.
The new regulation emphasizes the "sunshine" of communication.
In fact, the new regulation does not prohibit sponsor representatives from communicating with the regulatory authorities, but strictly prohibits "private contact in addition to normal work communication". The old routines of inquiring about the review trend and colluding the details of inquiry through private parties and private visits have been completely blocked. In the future, project communication must be traceable, open and carried out in accordance with procedures, so as to realize the "sunshine" of communication content.
In addition, explicitly writing "benefit transmission, bribery, instigating, assisting and instructing others to interfere" into the practice norms gives industry self-regulatory organizations the basis to directly cancel the qualifications of sponsor representatives with such behaviors and ban them from the industry, which greatly increases the cost of violations.
More importantly, the new regulation forces investment banks to return to "professional strength" and "quality control".
For a long time, some sponsors competed on "connections", but now they turn to compete on "business". In the past, "private connections" and "public relations-oriented sponsor representatives" will lose their living soil. Whether a project can pass the review returns to the level of the enterprise's hard technology/hard performance and the quality and efficiency of the sponsor representative's due diligence.
This is a great benefit to sponsor representatives and securities firms who abide by the compliance bottom line and do projects with professional competence, which helps to correct the abnormal ecology of the investment bank circle that used to "value contracting and public relations, but despise professional due diligence".
The solicitation of opinions on this document marks that the supervision of sponsor representatives' practice behaviors has formed a three-in-one closed loop of "administrative supervision + criminal accountability + industry self-regulatory norms".
By clarifying "not hunting the regulatory authorities" as the red line of practice for sponsor representatives, it provides the most direct institutional firewall and reason for refusal when sponsor representatives face unreasonable demands from major shareholders of to-be-listed companies asking them to "clear customs and handle affairs".
In the A-share market, Suzhou Qingyue Optoelectronics Technology Co., Ltd. (*ST Qingyue) was heavily punished by the China Securities Regulatory Commission for systematic financial fraud. On October 13, 2026, the China Securities Regulatory Commission issued the *Administrative Penalty Decision* to it, confirming that it inflated profits by deliberately undercounting inventory depreciation reserves and falsely selling chips during the IPO declaration stage (from 2020 to the first half of 2022), constituting fraudulent issuance.
In addition, Yuweng Information was also imposed the maximum "qualification penalty" by the Shanghai Stock Exchange that its listing application documents will not be accepted within five years due to violations such as financial fraud and concealment of equity holding on behalf of others during the IPO declaration process for the Sci-Tech Innovation Board.
Shortly after the release of the solicitation of opinions, new dynamics also came from the Hong Kong stock market. On October 13, the Securities and Futures Commission of Hong Kong ordered Chabaidao to suspend trading. The regulator suspects that the company's 2024 IPO was "artificially manipulated" to create the illusion that the stock was in high demand.
In response to the illegal and irregular behaviors in the IPO link, the regulatory authorities are continuously strengthening the "zero tolerance" attitude. The Securities and Futures Commission of Hong Kong has announced the revision of the *Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited*, allowing the imposition of conditions that continue to apply after listing on listing applicants, and requiring sponsors to focus on "red flags" such as large advance payments before and after listing, and large orders that suddenly pour in near the closing of the bookkeeping period.
It is conceivable that in the future, "problematic IPOs" will face more stringent review.
This article is from the WeChat official account "Rongzhong Finance" (ID: thecapital), written by Abu, edited by Wuren, and published with authorization from 36Kr.