China's two stock exchanges released revised regulations for
listings during the weekend, imposing new requirements for
already-listed companies as well as for new applicants.
The rules, amended from the 2002 version and effective from
December 10, govern such areas as disclosure, obligations of board
members, senior executives and sponsors, and risk warning and
delisting procedures, according to sources with the Shanghai and
Shenzhen stock exchanges.
The exchanges adjusted their rules to accord with regulations
issued by the China Securities Regulatory Commission (CSRC)
over the past two years.
For example, the new rules clarify the information disclosure
requirements for listed firms, especially disclosure pertaining to
major transactions or affiliated trade. They also specify
conditions under which listed companies may apply to withhold
disclosure to protect their lawful interests.
Vagueness or inconsistencies that existed in the previous
regulations offered some companies excuses to evade disclosure.
Some, through misunderstanding, revealed information that could
have been kept confidential.
Also under the new rules, board members, directors and top
management are legally committed to fulfill their duties.
Zheng Jing, securities representative at Beijing-based CITIC
Securities, said the amended regulations were needed because the
market has changed substantially since they were initially
implemented two years ago. The new rules are more detailed and
easier to follow, she?said Monday.
Each company will have to adjust their disclosure and other
practices according to the new rules, based on their own conditions
and obligations, she said.
The exchanges are obliged to amend the rules and improve the
level of supervision as the stock market reform intensifies, said
Yin Guohong, an analyst with China Securities Co.
With a more mature regulatory system, it is natural that the
stock exchanges take over more daily supervision functions from the
CSRC, Yin stated.
China's securities regulators have implemented a number of
reforms to improve the stock issuing system and?increase
market transparency and efficiency over the past two years.
Earlier this year, the CSRC introduced the sponsor system for
companies planning to float shares. The move was made to enhance
the responsibility of investment banks in choosing qualified
listing applicants and block poor performers from the bourses.
It also drafted a new pricing system for initial public
offerings to give investors more say in deciding IPO prices. That
draft is still under discussion.
(China Daily November 30, 2004)