On June 5th, China's securities regulator issued a series of requests for supplementary information to companies seeking overseas listings. The international department of the China Securities Regulatory Commission (CSRC) has requested additional materials from ten firms.
Among them, Weizhao Semiconductor has been asked to provide a detailed explanation regarding the significant difference in the grant prices for two separate equity incentive plans, one for Weizhu Yexin and another for Zhoushan Integration, and to justify the rationale behind this disparity. The company had submitted its application for a main board listing on the Hong Kong Exchange on January 12th, with GF Securities acting as the sole sponsor.
Specific Requests from the Regulator
The CSRC has instructed Weizhao Semiconductor to address several specific points and has requested its legal counsel to verify and provide clear legal opinions on the following matters.
The first point requires the company to clarify the rationale behind the share price for new shareholders introduced within the last 12 months, explain the reasons for any price discrepancies among different shareholders, and provide a definitive conclusion on whether these prices are fair, reasonable, and free from any improper transfer of benefits.
The second point focuses on the equity incentive plans. The company must explain the cause and justification for the notable price difference between the grants for Weizhu Yexin and Zhoushan Integration. It must also detail the composition and roles of personnel involved in the equity incentives, disclose any relationships they may have with other shareholders, directors, supervisors, or senior management, and confirm that no individuals legally prohibited from participating are involved. Furthermore, the company must address the fairness of the share prices, the terms of the agreements, the decision-making processes followed, and the overall compliance and standardization of the arrangements, concluding definitively on their legality and the absence of any improper benefit transfers.
The third point concerns special shareholder rights. The company is asked to fully disclose the content and specific termination clauses of any special rights arrangements, outline the decision-making processes undertaken, confirm unanimous agreement among all shareholders, state whether any disputes exist, and assess if these arrangements pose a substantive obstacle to the overseas listing.
The fourth point involves business qualifications and foreign investment rules. The company must detail its relevant business licenses and, with reference to the Special Administrative Measures for Foreign Investment Access (Negative List) 2024, clarify whether its operations and those of its subsidiaries fall into restricted or prohibited sectors for foreign investment. It must also confirm ongoing compliance with foreign investment policies before and after the proposed listing and share issuance, including under the "full circulation" mechanism. Additionally, it needs to disclose the duration and specific cooperation models of its key supplier distribution contracts.
The fifth point requires the company to state whether shares held by shareholders intending to participate in the "full circulation" scheme are subject to any pledges, freezes, or other encumbrances.
Use of Proceeds Scrutiny
Finally, regarding the use of proceeds from the offering, the company is instructed to itemize the specific amounts and proportions allocated to domestic and international investment projects, and detail the status of any required approvals, permits, or filings. It must also provide specifics on any new production base or production line construction projects funded by the proceeds, including their locations, and verify their compliance with relevant overseas investment regulations.
According to its prospectus, Weizhao Semiconductor is a leading Chinese provider of power semiconductor devices. The company specializes in the research, development, design, and sale of high-performance power semiconductor devices, particularly WLCSP products. It operates using a unique "fab-lite" model, achieving efficient production by combining outsourced manufacturing with in-house advanced packaging capabilities.
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