Key focus in IPO reviews for photovoltaic industry

By Zhou Tao and Zhao Yao, Grandway Law Offices

The photovoltaic (PV) industry is an important sector in renewable energy. Numerous photovoltaic enterprises have listed on capital markets in recent years, against a backdrop of carbon neutrality and peak carbon. In light of relevant review cases, this article examines the key points of any IPO review in the PV industry.


The upstream side of the PV industry mainly includes silicon materials, silicon rods/ingots and silicon wafers. The midstream mainly includes photovoltaic cells and modules. The downstream consists of photovoltaic power generation, including centralised photovoltaic power plants and distributed power generation systems.

The PV industry has two types of business models: vertical integration with multiple manufacturing processes across the industry chain, allowing for resource integration; and independent specialisation in specific processes.


The PV industry is substantially impacted by government through subsidies and policies including macroeconomics, industry support and trade protection. For example, the 531 PV New Policy of 2018 significantly impacted domestic PV industry demand and photovoltaic product prices; and support policies introduced since 2019 have gradually restored the prosperity of China’s photovoltaic industry.

Internationally, the EU and US anti-dumping and countervailing duty investigations, and US Section 201 investigations, have adversely affected the operating environment and overseas market development for Chinese PV enterprises.

In an IPO review, particular attention must be paid to the influence of industry policies, especially changes in the political and economic environments of export destinations and their impact on the industry.


Zhou Tao, Grandway Law Offices
Zhou Tao
Grandway Law Offices

In the photovoltaic industry, the upstream and midstream sectors belong to the manufacturing industry and do not require specific business qualifications. Generally, it is sufficient for a business to have production and operation-related qualifications or records such as emission permits, customs import and export consignee and consignor and foreign trade operator records.

The downstream sector is the application side of photovoltaic power generation. Conducting engineering, procurement and construction here additionally requires production and operation-related qualifications, such as safe production qualifications, construction enterprise qualifications and permits for the installation (repair and commissioning) of electric power facilities.


As many PV processes involve construction, it is important to pay attention to related matters. These include:

  • Whether the enterprise has obtained project approval or filed for project registration;
  • Whether the construction project has acquired permits such as land planning permits, construction project planning permits and construction permits;
  • Whether the land for the project has undergone approval procedures and has a certificate of land use rights;
  • Whether the relevant documents for environmental impact assessment have been obtained;
  • Whether energy-saving evaluation and examination for fixed asset investment projects have been conducted; and
  • Whether the construction project has implemented safety facilities or undergone safety evaluations.

It is crucial to look for instances of “construction before approval” or “investment before inspection” during the project construction process, and whether there are cases of exceeding approved production capacity during production.


The focus areas for PV industry IPO projects are similar to those for any construction project, with emphasis on the project land, development and reform authority approval/record, environmental impact assessment and energy-saving review.

Referring to relevant audit cases under the registration-based system, there is greater tolerance for IPO projects that have not obtained the necessary approvals, such as investment project land and/or environmental impact assessment before the initial application.

However, as the foundation of project construction, project land and environmental impact assessment procedures are of paramount importance. It is recommended they be obtained before the initial application or, at the very least, to ensure substantial progress and certainty in project land and environmental impact assessment procedures before the review process is completed.


Zhao Yao, Grandway Law Offices
Zhao Yao
Salaried Partner
Grandway Law Offices

Although the PV industry is an important sector in renewable energy, the environmental issues associated with construction still need attention.

This includes: examining whether it is an intensive energy-consuming or high-emission industry; whether production, operation and the investment project comply with state and local environmental protection requirements; the details of the environmental protection investments and related expenses, costs and expenditures; the actual operation of the environmental protection facilities; the matching between the environmental protection outlays, costs and expenses and the generated pollutants; and whether any environmental accidents occurred or administrative penalties were incurred during the reporting period.


Safe production has always been an important aspect of compliant operations across the photovoltaic industry. IPO reviews should generally focus on the effective implementation of a safe production system, the presence of significant loopholes in safe production management, the proper functioning of safe production facilities, production accidents, administrative penalties and the impact of related rectification measures on production operations.


For the downstream sector, additional attention needs to be paid to:

  • The status of project land, particularly if it involves leasing collective land, forests, grasslands, agricultural land, or other special types of land. Different land use regulations apply to various functional zones;
  • Asset compliance, focusing on the ownership of buildings, checking for any illegal constructions, and whether buildings or photovoltaic power plants are subject to mortgages; and
  • The qualifications of EPC business, permits for the installation (repair and commissioning) of electric power facilities and safe production permits.

Attention should also be paid to any changes in the investment entities and actual controllers of project companies, as well as illegal transferring of project approvals.


The PV industry presents certain technical barriers, so attention needs to be paid to the patents involved in the main business operations and their technical sources, and whether there is existing patent litigation or potential patent dispute.

If key technical personnel or major management personnel have worked in similar companies within the industry, it is essential to consider issues such as non-competition and duty of invention, and whether the personnel are involved in disputes or controversies with their former employers about intellectual property, non-competition, confidentiality obligations or employment relationship.

Also keep an eye on the technology road map, the updating and replacement of related technologies, and their impact on continuing operations.

Zhou Tao is a partner and Zhao Yao is a salaried partner at Grandway Law Offices

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