Recently, Shenzhen Stock Exchange (‘SZSE’) promulgated the Guidelines on Information Disclosure of Seed and Planting, Construction Machinery and Decoration Sectors (‘the Guidelines’). SZSE, by putting investors’ needs at first, took this new measure to fully implement industry regulation and improve the effectiveness and pertinence of information disclosure by listed companies.
Two sets of industry information disclosing guidelines satisfy investors’ different needs for information.
Since the pilot implementation of industry regulation in 2011, SZSE has been searching for and summarizing the operation rules and risk features of different industries. By taking into account the characteristics of listed companies in Shenzhen stock market, based on the emerging industries and the high-profile traditional industries, SZSE has worked out two sets of guiding systems on industry information disclosure. In recent years, such guidelines were issued one after another for ChiNext board listed companies in eight emerging sectors including broadcasting, films and television, medicals and biomedical products, photovoltaic industry chain, energy-saving and environmental protection services, online gaming, on-line videos, E-commerce and Internet marketing, and for three traditional industries including husbandry and aquaculture, solid mineral resources and real estate.
With the promotion of the supply-side structural reform, seed and planting sector, as the strategic and fundamental core sector, greatly benefits from government policies and is attracting growing attention from the market. The construction machinery sector is under great pressure of surplus productivity and in need of transformation and upgrading. Therefore, investors are paying more and more attention to information concerning industry policy adjustment, industry development trend, measures on company transformation and upgrading and etc.. The decoration sector is also getting close attention from investors as the sector is undergoing consumer structure upgrading. Therefore, SZSE formulated the Guidelines to cater to the needs of investors for information disclosure of listed companies in relevant sectors.
Focusing on industrial characteristics and risks to require different disclosure contents
Relevant officer of SZSE said, the above Guidelines gives comprehensive consideration to the industrial characteristics, investors’ needs and information disclosure cost of listed companies of seed and planting, construction machinery and decoration sectors, and has regulations on information disclosure of listed companies in the above said sectors from the perspectives of periodic report and interim report, first disclosure and continuous disclosure, industrial characteristics and business scope, industrial chain and core competitiveness, value and risk, financial and non-financial information, so as to emphasize the disclosure of industrial characteristics and risks. For example, as for business year of seed industry companies doesn’t overlap with fiscal year, and inventory data doesn’t match with sales data at the end of fiscal year, the Guidelines for Seed and Planting Sector requires seed sector companies to disclose sales data, inventory data and main products sales data of the business year at the end of the business year, so as to facilitate investors to comprehensively understand their business state. As for construction machinery companies constantly try new business mode or new business area during the transformation and upgrading process, the Guidelines for Construction Machinery Sector requires such companies to strengthen risk revealment and disclose the specific contents and relevant risks of new business and sales mode. As for the issue of few information disclosed by decoration companies, the Guidelines for Decoration Sector requires decoration companies to increase the disclosure frequency of business state and disclose their order information quarterly via announcements, so as to facilitate investors to gain more timely, accurate and complete business information.
In addition to strengthening of information disclosure obligations, SZSE adjusts the applicability of rules according to its practical industry regulatory experience, so as to fully release the vitality of market players under the condition of risk control. For example, as for the characteristics of new sales mode of construction machinery companies, the Guidelines for Construction Machinery Sector optimizes the requirements for disclosure and review of guarantee for specific loans of dealers by construction machinery companies, and stipulates that the guarantee for bank loans (such loans will be directly paid to construction machinery companies as payment for goods) of dealers by construction machinery companies may be included into the estimated guarantee quota to be reviewed at shareholders’ general meetings. In the subsequent implementation, relevant guarantee will be implemented within the total guarantee quota to improve business efficiency.
Formulating regulations via soliciting public opinions to enhance the pertinence and effectiveness of regulations
The principle of ‘formulating regulations via soliciting public opinions’ is fully embodied in the formulation of the Guidelines. SZSE publicly solicits opinions from listed companies, market institutions and medium-small investors, and carries out face-to-face communication with listed companies and market institutions via symposium, many opinions from them are included into the final draft of the Guidelines after serious collation and study. According to the results of investors questionnaire, the Guidelines well meets investors’ needs, 83% to 93% investors show concerns about main contents of the Guidelines, more than 90% investors believe that the promulgation of the Guidelines helps them to understand relevant financial situation and investment decisions of listed companies.
Relevant officer of SZSE said, SZSE will strictly follow the idea of ‘legal, strict and overall regulation’ to constantly promote industry regulation, and enhance the effectiveness and pertinence of information disclosure of listed companies by rules formulation, regulation during and after relevant event and active guidance, so as to promote the healthy development of multi-level capital market of SZSE.
