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The Shanghai Stock Exchange (SSE) released the “Business Guidelines for Suspension and Exemption of Listed Companies’ Information Disclosure” (the “Business Guidelines” for short) on May 30, 2016. Its main content is cancelling the system of prior application for the business of suspension and exemption of information disclosure, which is changed into information disclosure obligors making their own judgments prudently according to the standards and the SSE carrying out in-process and aftermath regulation. The “Business Guidelines” will come into effect on June 10, 2016.
As mentioned in the “SSE Stock Listing Rules”, listed companies and relevant information disclosure obligors shall, according to the rules, disclose information in a timely and fair manner and ensure that the disclosed information is true, accurate and complete. At the same time, regarding some special cases, the “SSE Stock Listing Rules” sets the system of suspension and exemption of information disclosure.
Advancing regulatory transformation continuously, cancelling prior application for suspension and exemption of information disclosure
According to an SSE official, changing the current prior application for suspension and exemption of information disclosure to the in-process and aftermath regulation by formulating the “Business Guidelines”, the SSE mainly considered the following two factors:
The first factor is to advance the regulatory transformation in information disclosure. With the advancement of the regulatory transformation in information disclosure such as the direct channel for information disclosure, listed companies have continued to strengthen their sense of responsibility and self-management capabilities in information disclosure. As a conventional business for listed companies, the suspension and exemption of information disclosure has been in operation for years. According to statistics, more than 90% of the applications for suspension or exemption of information disclosure met the rules and were approved, so there is limited necessity for prior examination. Therefore, from the perspective of regulation, the time has been ripe to cancel the system of prior application for suspension and exemption of information disclosure through the formulation of business guidelines.
The second factor is to further standardize the SSE’s self-regulatory behaviors. In practice, a small number of the issues for which listed companies submit their prior applications for suspension or exemption of information disclosure are likely to be sensitive to some extent. Therefore, the SSE changes the prior application into in-process and aftermath regulation, in a bid to further standardize its behaviors in regulating the information disclosure of listed companies and prevent regulators from getting in touch with sensitive information in advance.
Requiring listed companies to set up relevant systems and strictly manage suspension and exemption issues
While cancelling the stipulation of prior application, the “Business Guidelines” requires that listed companies should strictly manage the issues for the suspension and exemption of information disclosure, make prudent judgments, and set up the relevant internal management systems, so as to specify internal review procedures for the issues for the suspension and exemption of information disclosure. After being discussed and approved by the companies’ directorates, the internal management systems shall be disclosed on the SSE website. In addition, the “Business Guidelines” also stipulates the responsibility of information disclosure obligors for confidentiality.
Establishing the regulatory mechanism and intensifying in-process and aftermath regulation
After cancelling the procedure of prior application, a small number of companies may possibly abuse the procedures of suspension and exemption to avoid the obligation of information disclosure that should be fulfilled. In this regard, the SSE will, according to the “Business Guidelines”, take relevant in-process and aftermath regulatory measures: firstly, the SSE will enhance the in-process regulation. If the information with its disclosure suspended or exempted is leaked, or rumors stir in the market, the listed company will be urged to timely verify relevant circumstances and disclose them to the public; secondly, the SSE will intensify aftermath sanctions. Disciplinary actions or regulatory measures will be timely adopted for those abusing the suspension and exemption procedures.
The SSE official added that after the release of the “Business Guidelines”, the way of listed companies handling the businesses of suspension and exemption of information disclosure will be changed. On this account, to facilitate the understanding and implementation of the listed companies, the SSE has analyzed the problems that the listed companies will possibly encounter in handling the business of suspension and exemption of information disclosure, and formulated and released the Q&A on relevant issues for the reference of the listed companies.
