Result of the Registration System Unveiled and the Control over the Partnership System Lifted

　　The draft amendment to the Securities Law attracting widespread attention was submitted on April 20 to the Standing Committee of the National People’s Congress for deliberation. The draft amendment contains the proposals to cancel the system for the examination and approval of stock issuance, enhance the protection of investors, allow the establishment of securities partnerships, and allow securities practitioners to purchase and sell stocks. Another highlight of the draft amendment is the proposal on the establishment of the system for the exemption from registration of public offerings to exempt the registration or approval of the stock issuance to qualified investors, the issuance for crowd funding and the small-amount issuance or the issuance under the equity incentive or employee stock ownership plan.

　　National Regulations on Tax Collection and Administration Launched for Trial Implementation since May 1

　　Among other things, the National Regulations on Tax Collection and Administration (Version 1.0) contains (1) a comprehensive summary of all the specific business matters in tax collection and administration, (2) the detailed provisions on the processes, the links and the requirements for the operation of each business matter, and (3) the clarified standards for taxation administration to reduce the room of discretion and curb the arbitrariness of taxation administration.

　　Hidden Dangers in Kaisa Group’s Financial Statements Finally Exposed

　　Kaisa Group’s Audit Report of 2014 exposed its huge liabilities previously hidden, which was highly likely to have resulted from the Group’s financing through “borrowing in the disguise of share issuance”. Trust products actually played the role of creditors, but in the financial statements, they flowed into the Group in the disguise of equity and the fund from such trust products was included in the minority shareholders’ equity, thereby lowering the Group’s liability-asset ratio.

　　Financing Balance Already Close to the Theoretical Limit of Securities Brokers’ Finance

　　At the end of 2014, the top 15 listed securities brokers ranked by the market share in the financing market and the securities lending market had the total liabilities of RMB 1,672.4 billion yuan, 3.91 times the total net assets of RMB 426.7 billion yuan. In order to meet the growth of the financing balance in the past half a month and in the future, securities brokers must significantly increase their liabilities-net asset leverage and divert other financial assets to conduct the financing business and the securities lending business, but the room for both measures is limited.