According to the notice issued by the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) for the disclosure of 2006 annual reports, the listed companies should complete their annual reports' disclosure before April 30, 2007. In the disclosure, the influence of the new accounting standards should be analyzed in details. Companies without complete debt clearing should reveal the causes, the clearing measures and the progress as well as the accountability schemes.
The notice requires that companies listed before December 31, 2006 should complete the compilation, submission and disclosure of their 2006 annual reports before April 30, 2007. If a company cannot complete the disclosure on schedule, it should announce, before April 15, 2007, the causes, the solutions and the extended deadline. Meanwhile, from May 1, 2007, the exchange will suspend the trading of its stocks and derivatives until the disclosure is completed. Moreover, the exchange will impose public censure on the company and its related personnel. According to the principle of balanced disclosure, the SSE will allow a daily maximum of 50 companies to disclose their annual reports. And the SZSE will, in principle, allow a daily maximum of 25 listed companies on the main board for disclosure.
The notice dictates that if a listed company's performance is leaked before the formal disclosure of the annual report or if its performance rumor causes abnormal fluctuation of its stocks and derivatives, the company should immediately release the unaudited financial data of 2006. In the process of auditing by certified public accountants, if there is a significant discrepancy (over 10%) between the audited financial data and the disclosed data, the company should immediately publish an announcement to explain the discrepancy.
Paying special attention to the profit distribution of listed companies, the notice requires that the directorates of listed companies, who make profit in 2006 but don't have schemes of cash profit distribution, should present reasons and make clear the usage and usage plan for the undistributed profits.
The notice also requires that the listed companies that have completed the equity division reform should disclose the special promises made in the reform by their original holders of non-floating shares as well as their implementations. Besides, they should also disclose the number of the floating shares without sales limit held by their original holders of non-floating shares who hold more than 5% shares at the end of the reporting period. By comparing that number with the shareholding number on the listing date of shares with sales limit in the equity division reform, they should also disclose the shareholding change.
According to the notice, the certified public accountants should issue the special remarks on the capital occupation by the controlling shareholders and other related parties of the listed companies. Listed companies with non-operational occupation should make additional disclosure of the balances of the non-operationally occupied capital at the beginning and the end of 2006. Also, they should disclose the debt clearing progress, including the clearing amount, methods and date. Listed companies with new non-operational occupation in the reporting period should disclose the occupation date, amount, causes, persons in charge and their directorates' solutions. As for the companies without complete debt clearing by the end of 2006, their directorates should explain the causes, detail the adopted measures and make specific schemes for the accountability. Meanwhile, companies without the equity division reform should disclose their arrangements for the reform.