On December 27, the Shanghai Stock Exchange (SSE) released the “Notice on Revising and Abolishing Relevant Business Rules of SSE Delisted Share Transfer System” and cancelled the Delisted Share Transfer System. From now on, the delisted shares in the Shanghai market shall be transferred to the National Equities Exchange and Quotations (the “New Third Board”) for listing and transferring. An official of the SSE answered the following questions in the interview.
Q1. What is the original intention of the SSE to set up the Delisted Share Transfer System in 2012?
Before the reform of the delisting system in 2012, delisted shares on the SSE were transferred to the Agency Share Transfer System (the “Old Third Board”). Judging from the previous practice, the transfer of delisted shares to the Old Third Board has involved many processes and operated not smoothly enough. In the reform of the delisting system in 2012, the SSE set up the Delisted Share Transfer System with an aim to perfect the delisted share transfer system, simplify the processes, optimize the procedures, bring convenience to small and medium-sized investors, and allow investors to transfer shares without changing the trading floor and their trading habits.
Q2. Why did the SSE cancel the Delisted Share Transfer System?
At present, the construction of China’s New Third Board has achieved positive effect and it has enjoyed steady and orderly operation. In 2013, delisted companies of the Old Third Board and the two companies delisted in that year have all transferred to the New Third Board for listing and transferring; the procedures of registration change of investors’ share accounts have been well arranged; and relevant work has become more convenient. Judging from the overall situation of the construction of a multi-level capital market, the conditions for a unified delisted share transfer system have been mature.
Considering the abovementioned situation, the SSE believed after research that unifying the delisted share transfer system and the regulation mechanism of delisted companies will help to provide system guarantee for the transformational development of delisted companies and safeguard rights and interests of investors. Therefore, as approved by the China Securities Regulatory Commission (CSRC), the SSE decided to revise relevant business rules and canceled the delisted share transfer system. From now on, the shares in delisted companies in the Shanghai market shall all be transferred to the New Third Board for listing and transferring.
Q3. Which rules have been revised in this revision? What is the major content?
The current revision mainly aimed at revising and abolishing the rules related to the delisted share transfer system. The “SSE Stock Listing Rules”, the “SSE Detailed Rules on Business in Delisting Arrangement Period”, and the “SSE Measures on Re-listing of Delisted Companies” have been revised, and the “SSE Provisional Regulations on Share Transfer on Delisted Share Transfer System” has been abolished.
The major content of this revision is to cancel the statement in the business rules that relates to the “Delisted Share Transfer System” and to maintain the rule that delisted companies can choose to transfer their shares to the “national over-the-counter market and other qualified regional over-the-counter markets”. Rules and provisions relating to the delisting rules have remained unchanged.
Q4. What is the follow-up arrangement of the SSE after this revision?
The revised rules shall come into effect as of the date the notice is released and relevant provisional rules shall be abolished at the same time. With regard to the follow-up work, the SSE will, in accordance with the delisting work responsibility assignment, specify the connecting work between the SSE market and the New Third Board, urge delisted companies on the Shanghai Market to transfer their shares to the New Third Board for listing and transferring according to the rules, and make sure that investors can successfully trade shares in the New Third Board. Next, the SSE will continue to stick to the unified arrangement of the CSRC, steadfastly implement the new delisting system, and actively carry out reform and innovation in practice, so as to promote the realization of the marketization, legalization, and normalization of the delisting system.
