It is recently learned from relevant authorities that the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) plan to take special institutional arrangements for the companies without the equity division reform. This is to further speed up the process of ending the equity division reform for a comprehensive settlement of the issue as early as possible. The special arrangements include the trading limit of 5%, elimination from index constituents and adopting of special auctions trading method in due time. All this will prevent market risks and urge the major shareholders and actual controllers of the companies without the reform to accelerate the launch of the equity division reform.
As of today, 1,269 listed companies on the SSE and the SZSE have completed or begun the equity division reform, accounting for 94.49% of the total companies supposed for the reform, with their market capitalization covering 96.79% of the total. The equity division reform of China's listed companies is drawing to a close. However, 74 companies still, for various reasons, have not entered the reform procedures. This has affected the completion of the equity division reform.
It is learnt that the special institutional arrangements of the SSE and the SZSE include the following aspects. Firstly, the trading limit for stock trading prices of companies without the reform will be adjusted to 5% according to the special treatment to the ST and *ST shares. Moreover, to suppress the stock price fluctuation and prevent the market speculation and manipulation, their shares will be treated as ST and *ST shares in terms of supervision such as information disclosure. Secondly, the index constituent's selection criteria will be adjusted accordingly. Companies without the equity division reform, with a small proportion and outside the mainstream market, will be excluded from the index constituents, for they have no matches in any aspects for a constituent. If they stay in the index constituents, they are likely to mislead the investors. Thirdly, according to the market condition, special auctions trading method, to be taken into consideration for companies without the reform, will be introduced in due time.
According to relevant officials, supportive measures for companies with the equity division reform are also under study. In the early days of the reform, the China Securities Regulatory Commission already pointed out in the "Guidance Opinion on Equity Division Reform of Listed Companies" that efforts should be made to create a favorable market mechanism for active and reliable solutions to the equity division by sticking to the market orientation of the reform. In the course of the reform, relevant authorities have repeatedly said that companies with the reform and those without the reform will be treated differently. Earlier reform, earlier benefit. Companies without the reform or refusing the reform will be gradually marginalized. The special institutional arrangements are the detailed methods for the marginalization of companies without the reform. All this, beneficial to further consolidation and expansion of the reform achievements, will thus lay a solid foundation for the long-term and stable development of the capital market.
