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SZSE recently completed the assessment of information disclosure on companies listed on the Main Board and the ChiNext Board in 2021. With SZSE’s Guidelines for Self-discipline Regulation of Listed Companies No. 11 – Information Disclosure Assessment as the basis, SZSE has conducted a comprehensive assessment of 2,553 listed companies’ information disclosure work by combining the companies’ self-assessment and the exchange’s evaluation. The final assessment results are that 454, 1,744, 275 and 80 companies were rated A (Excellent), B (Good), C (Satisfactory) and D (Unsatisfactory) respectively, and accounting for 17.78%, 68.31%, 10.77% and 3.13% respectively. The proportion of companies rated A and B rose by 3.29 percentage points from the previous year, while the number of companies rated C and D decreased by 49. Overall, 215 (8.42%) companies has been rated A for over three years straight, 121 for over five years straight, and 38 including Ping An Bank, Shenzhen Energy, YTP and Inovance Technology for over 10 years straight. On the whole, the information disclosure quality of SZSE-listed companies has been improved steadily.
Information disclosure assessment plays a positive guiding role
In the 2021 information disclosure assessment, SZSE has, based on regulatory practices and investor concerns, further intensified assessment of listed companies’ distribution of cash dividends and share repurchase, investor relations management, fulfillment of social responsibilities, etc., to enhance the positive guiding role of the assessment.
Incentive function of extra-point items. First, SZSE has given extra points to companies that have disclosed their cash dividend and share repurchase plans, to guide companies to actively give back to shareholders. A total of 1,698 companies disclosed their annual cash dividend plans, accounting for seventy percent of all profit-making companies with the average dividend payout ratio being 34.8%. Plus, 567 companies repurchased shares in 2021. Second, SZSE has assigned extra points to companies that have actively held investor presentations and promptly answered investors’ questions, to improve the communication channels between listed companies and investors. Over ninety percent of listed companies held performance presentation themed by “Ten News”, of which more than seventy percent got the extra point. Third, SZSE has rewarded companies that have released CSR reports or ESG reports with extra points, to guide companies to actively fulfill social responsibilities. A total of 550 companies have released CSR reports or ESG reports, resulting in an increase of more than 100 companies comparing with the previous year, and 1,559 companies have disclosed relevant contents on environmental protection, pollution control, resource conservation and ecological protection in their annual reports, indicating enhanced awareness of social responsibility. Fourth, SZSE has given extra points based on the effectiveness of information disclosure, voluntary information disclosure and participation in preparation of relevant information disclosure rules. Both the number and percentage of companies that obtained this extra points have raised comparing with the previous year, showing the guiding role of information disclosure assessment on listed companies.
Warning effect against negative indicators and point deductions. In 2021, some companies still incurred negative indicators or point deductions, presenting poor information disclosure quality, unsatisfactory standard operation level, and inadequate compliance awareness. Their information disclosure quality and standard operation level are in need of further improvement. Apart from 159 companies that cannot be rated A due to the fact that they have been listed for less than a year according to the rules, other 390 companies could not be rated A for being issued regulatory letter or over 3 month period of board secretary vacancy, etc. Besides, 89 companies hit Category-C indicators because they have been given qualified opinions, have major internal control defects, or with over 6 month period of board secretary vacancy, etc. 38 companies triggered Category-D indicators such as being given disclaimer of opinions or receiving administrative punishment. Point deductions are mainly subject to regulatory measures or disciplinary punishment, and requirements on public error correction of information, etc. Both the number and proportion of companies whose points were deducted for the said reasons have decreased from the previous year.
Improving the quality of listed companies with information disclosure at the core
Improving the quality of listed companies is a major decision and plan of the CPC Central Committee and the State Council and an internal requirement to promote the healthy development of the capital market. Information disclosure quality is an objective and important indicator for measuring the quality of listed companies. In recent years, SZSE has, with information disclosure at the core, earnestly fulfilled frontline regulatory service duties, to promote the high-quality development of listed companies. First, formulating rules and regulations. SZSE has vigorously pushed for integration of self-discipline regulation rules of listed companies and focused on building a simpler, user-friendlier, more mature and established system of rules. Second, strengthening regulation. SZSE has taken prompt actions regarding suspected news jacking, concept hype, abnormal transactions, financial fraud, etc. In 2021, SZSE issued a total of 2,771 regulatory inquiry letters, giving full play to the warning and error-correcting role of regulatory inquiry. Meanwhile, it sent out 202 pieces of letters of decision on regulatory disciplinary punishment to listed companies to strictly punish those who have disrupted the market order. Third, attaching importance to training. SZSE has continued to hold the training for listed companies and the “critical minority” that covers various contents including information disclosure rules, preparation of annual reports, performance presentations, cases of violation of laws and regulations, etc., to comprehensively strengthen the compliance awareness of listed companies and the “critical minority”. Fourth, optimizing services. During the pandemic, SZSE has further optimized self-discipline regulation service, including extending the time period of information disclosure, allowing the use of electronic seal, supporting and encouraging market entities to increase their shares and conduct repurchase, etc.
Next, SZSE will continue to practice the principles of “system building, non-intervention, and zero tolerance” and the urges to revere the market, revere the rule of law, hold high professionalism, stay alert to risks, and obtain support from various parties. It will, with information disclosure at the core as always, give full play to the guiding and restrictive role of the information disclosure assessment, and implement scientific regulation, classified regulation, specialized regulation, and continuous regulation in depth. It will also adopt various measures to push for improvement in the information disclosure quality and standard operation of listed companies, help enhance the five capabilities for high-quality development of listed companies, and strive to build a healthy capital market ecosystem.
