To complete the disclosure of listed companies’ annual reports of 2013 (the “2013 annual reports” for short), the Shanghai Stock Exchange (SSE) hereby notifies relevant issues as follows, according to the “Rules No. 2 on Contents and Format of Information Disclosure by Companies Publicly Issuing Securities -- Contents and Format of Annual Reports” (hereinafter referred to as the “Rules on Annual Reports”) of the China Securities Regulatory Commission (CSRC) and the “SSE Stock Listing Rules” (hereinafter referred to as the “Listing Rules”).
I. General Requirement
(I). Listed companies’ boards of directors should organize relevant personnel to earnestly study all rules, released by the CSRC and the SSE, on the compilation, submission, and disclosure of the 2013 annual reports, as well as fulfill the obligation of disclosing the 2013 annual reports according to requirement.
(II). Listed companies should strictly follow all the SSE’s business guidelines and business manuals related to the direct channel for information disclosure issued by the SSE, choose the correct category of announcements in the business administration system of companies, as well as operate submission for relevant documents of information disclosure, in a bid to ensure successful completion of the disclosure work of the 2013 annual reports.
(III). Directors, supervisors, senior management members, and other insiders of listed companies shall assume secret-keeping obligations before the disclosure of the 2013 annual reports. No one is allowed to divulge the contents of the annual reports in any way before the disclosure.
II. Detailed Requirements
(I). Disclosure Time
All companies listed on the SSE before December 31, 2013 should compile, submit and disclose the 2013 annual reports before April 30, 2014, with the disclosure time not later than the time of disclosing the first quarter reports of 2014. The companies newly listed between January 1 and April 30, 2014 should also disclose their annual reports of 2013 before April 30, 2014 if they fail to disclose the audited financial accounting information of 2013 in their listing announcements.
The SSE encourages listed companies to publish their annual reports on their own websites, but the time of disclosure cannot be earlier than that of the disclosure on the SSE website. If a listed company predicts it is unable to disclose its annual report of 2013 before April 30, 2014, it should submit a written report to the SSE before April 15, 2014, and announce the reason, solution and deadline of the postponed disclosure. The SSE will suspend trading of shares and derivatives issued by the listed company from the first trading day in May 2014, and publicly criticize the listed company and those responsible, according to relevant rules in the "SSE Measures for Disciplinary Sanctions and Regulatory Measures”.
(II). Performance Prediction
Listed companies should make performance predictions before January 31, 2014 according to the Articles 11.3.1 and 11.3.2 of the “Listing Rules”. Audit committees and independent directors of listed companies should, in accordance with relevant regulations, timely communicate with the companies and their certified public accountants for annual audit, and pay attention to the performance predictions and relevant corrections.
(III). Performance Express
A listed company should disclose a performance express according to the Articles 11.3.5 and 11.3.6 of the “Listing Rules” if its performance information is divulged in advance or abnormal fluctuations happen to trading of shares or derivatives issued by it because of performance rumors prior to the official disclosure of its annual report.
(IV). Risk Alert Announcement
According to the Articles 13.2.2 and 14.1.2 in the “Listing Rules”, listed companies should release risk alert announcement before January 31, 2014, as well as disclose risk alert announcement twice at least before disclosing the 2013 annual reports, when predicting situation of possible delisting risk alert or listing suspension due to audited net profits, year-end net assets, and business revenue, as well as classification of audit opinions.
According to the Article 14.3.2 in the “Listing Rules”, listed companies should release an announcement on risk alert within 10 days after the accounting year ends, when predicting situation of possible listing termination due to audited net profits after excluding extraordinary profit and loss, year-end net assets, and business revenue, as well as classification of audit opinions or failing to disclose annual reports of the recent year within the legal time limit.
(V). Registration of Insiders of Inside Information
Listed companies should make efforts on the registration of insiders of inside information in the annual reports. If a listed company needs to submit information to external parties after the compilation of the annual reports and before their disclosure, it should register relevant staffs of the external parties as insiders of inside information.
(VI). Disclosure Focuses
1. Cash Dividend Distribution
According to the “Notice of Further Implementing Cash Dividend Distribution of Listed Companies” (Zheng Jian Fa [2012] No. 37 Document), the “No. 3 Regulatory Guidelines of Listed Companies: Cash Dividend Distribution of Listed Companies” (CSRC Announcement [2013] No. 43 Document), and the “Guidelines for Cash Dividend Distribution of SSE-listed Companies”, listed companies should disclose in details the formulation and implementation of cash dividend distribution policies to make clear whether the policies accord with the provisions in the Articles of Association or meet the requirements of the resolutions at shareholders’ meetings, the standards and proportions of cash dividend distribution are clear and explicit, relevant procedures and mechanisms for policy making are complete, independent directors fulfill their duties and play their roles, small and medium-sized shareholders have the opportunities to express opinions and appeals, and their legal rights and interests are well protected. If a listed company needs to adjust or change its cash dividend distribution policy, it should explain in details whether the conditions and procedures for adjustment or change are compliant and transparent.
2. Management’s Discussion and Analysis
Listed companies should give a retrospect and prospect of business performances within the reporting period and future development plans as well as risks in strict accordance with the requirements for information disclosure in the “Management’s Discussion and Analysis” in the “Rules on Annual Reports”.
3. Internal Control
When disclosing the 2013 annual reports, listed companies in the following cases should disclose directorates’ self-evaluation reports on internal control (hereinafter referred to as the “internal control reports”) according to relevant regulations and requirements.
(1). SSE-listed companies in the SSE Corporate Governance Sector;
(2). financial companies;
(3). companies issuing shares both inside and outside China;
(4). listed companies meeting the requirements in the “Notice on Implementation of System of Rules for Internal Control of Listed Companies on the Main Board by Category and in Batches in 2012” (Cai Ban Hui [2012] No. 30 Document).
The SSE encourages those that plan to apply for qualifications in the SSE Corporate Governance Sector and other listed companies to disclose internal control reports.
Those issuing shares inside and outside China as well as the listed companies meeting the requirements in the “Notice on Implementation of System of Rules for Internal Control of Listed Companies on the Main Board by Category and in Batches in 2012” (Cai Ban Hui [2012] No. 30 Document) should disclose audit reports issued by the certified public accountants on internal control of financial reports (hereinafter referred to as “audit reports on internal control”) together with internal control reports. The SSE encourages other listed companies to disclose audit reports on internal control.
Other SSE-listed companies should also attach importance to the establishment of the internal control systems according to the “Basic Rules for Enterprises’ Internal Control”, the “Supporting Guidelines for Enterprises’ Internal Control” and other requirements, and disclose the base for establishing internal control of financial reports and the status of the establishment of internal control systems in the part of “Internal Control”.
If a listed company discloses its internal control report, its directorate should discuss those reports separately and disclose them on the SSE’s website in the form of separate reports.
4. Social Responsibility Report
SSE-listed companies in the SSE Corporate Governance Sector, those issuing shares both inside and outside China, and financial companies should disclose the reports on fulfillment of social responsibilities (hereinafter referred to as “social responsibility reports”) together with the 2013 annual reports. The SSE encourages other qualified listed companies, especially listed companies in steel, metallurgy, or electric power sectors, to disclose the reports on social responsibility reports together with the annual reports of 2013.
If a listed company discloses its social responsibility report, its directorate should discuss the report separately and disclose the report on the SSE’s website in the form of separate reports.
5. Commitments
If a listed company’s shareholders, transaction counterparts, or other related parties have made commitments on the performance of the company or that of the injected assets in 2013, the directorate should pay attention to the fulfillment of the commitments. If the accounting firm issues the special examination opinion on it, the company should disclose the opinion together with the annual report on the SSE’s website.
If the performance of the company or that of relevant assets in 2013 fails to reach the level as promised, the company should separately discuss the spread between the actual profit and the promised amount, specify in details the spread and the measures already taken or to be taken by the company, and urge relevant shareholders, transaction counterparts, or other related parties to fulfill the commitments at the directorate meeting discussing and approving the 2013 annual report.
Listed companies should disclose the commitments made by themselves and their shareholders with shareholding proportion above 5% according to the requirements in the “Rules on Annual Reports”. If a listed company’s controlling shareholder fails to fulfill the commitment, the directorate should urge the controlling shareholder to make new commitments or propose compensation schemes after going through the necessary procedures.
6. Capital Occupation
If a listed company’s controlling shareholder and related parties occupy non-operating capital, the company should disclose the case in strict accordance with the requirements in the “Rules on Annual Reports”.
The certified public accountant should, according to the provisions in the “Notice of Some Issues on Regulating Fund Transfer Between Listed Companies and Related Parties and Outward Guarantee Provided by Listed Companies” (Zheng Jian Fa [2003] No. 56), issue the special examination opinion on capital occupation by the listed company’s controlling shareholder and other related parties, and the opinion should be disclosed on the SSE’s website.
7. Illegal Buying and Selling of Shares of Listed Companies
If a listed company’ directors, supervisors, senior managers, and shareholders with the shareholding of above 5% illegally buy and sell shares in the company, or other suspected illegal buying and selling of shares in the company occur and the company has disclosed that it will withdraw the illegal incomes during the reporting period, the listed company should disclose the time and the amount of withdrawing the illegal incomes by the board of directors in the “Significant Events” in the full text of the annual reports.
8. Accounting Policies Adjustment, Accounting Estimations Change, and Accounting Errors Modification
If a listed company has made changes to accounting policies and accounting estimations or made modifications to significant accounting errors during the reporting period, it should make explanation in its annual report according to the requirements of the “Rules on Annual Reports”. Besides, the listed company should submit to the SSE the written reports on the opinions made by the board of directors, the board of supervisors, and independent directors, as well as relevant remarks made by the accounting firm on the abovementioned changes and modifications. The remarks of the accounting firm should include the reasons for the abovementioned changes and modifications, the detailed accounting treatments, the affected amount for previous years’ financial positions and operating results (if concerning retroactive adjustments), and whether necessary communication has been conducted with the former accounting firm (in case of the change of the accounting firm).
If a listed company needs to make retroactive adjustments to the financial data of previous years in the 2013 annual report due to modifying significant accounting errors, it should disclose the modifications to significant accounting errors, the accountability measures and the treatment result of the board of directors towards relevant persons in charge, in the form of temporary announcement before or on the disclosure date of the 2013 annual reports according to the CSRC’s relevant regulations.
9. Audit Opinions
If a listed company is issued non-standard audit opinions (including qualified opinion, disclaimer of opinion, adverse opinion, and audit opinions with unqualified opinion on stressed issues or other issues) on the 2013 financial accounting report by the accounting firm, it should submit relevant documents to the SSE in accordance with the provisions in Chapter 6 of the “Listing Rules”.
If a listed company is issued disclaimer of opinion or adverse opinion on the 2013 financial reports by the accounting firm, it should disclose a risk alert announcement every half a month from the disclosure day of the 2013 annual report till the day when the involved issues are settled or the day when the semi-annual report of 2014 is disclosed. The risk alert announcement should specify companies’ latest operating situation and the progress of the involved issues.
10. Convertible Corporate Bonds
Listed companies issuing convertible corporate bonds should additionally disclose relevant contents in the 2013 annual reports according to the requirements in Chapter 6 of the “Listing Rules”.
11. Corporate Bonds
Listed companies that have issued corporate bonds and listed the bonds on the SSE should additionally disclose relevant content in the 2013 annual reports in accordance with the “SSE Corporate Bonds Listing Rules”.
If listed companies having issued corporate bonds and listed the bonds on the SSE predict that they are to suffer continuous loss in recent two years, they should release the risk alert announcement on possible listing suspending of corporate bonds before January 31, 2014 and disclose the risk alert announcement for at least two times before the disclosure of the 2013 annual reports.
12. Special Industries
Listed companies in special industries should also execute special regulations formulated by the CSRC for commercial banks, insurance companies, securities companies, and companies engaged in real estate development.
Listed companies engaged in real estate, petroleum and gas exploitation, coal mining and processing should also make information disclosure in line with the “No. 12 Work Memos of Listed Companies Work on Day-to-day Information Disclosure” and the guidance on information disclosure of relevant industries issued by the SSE.
(VII). Continuous Supervision
Listed companies under the continuous supervision of the sponsor institutions or financial advisers should, in accordance with relevant rules of the CSRC and the requirements of the “SSE Guidance for the Continuous Supervision Work on Listed Companies”, submit the sponsor institution’s report on continuous supervision or the financial advisers’ opinions on continuous supervision to the SSE in the prescribed period after the disclosure of the 2013 annual report, and disclose the abovementioned information on the SSE website.
(VIII). Debriefings of Independent Directors
In accordance with relevant work memos of the SSE, independent directors of listed companies should earnestly complete the work on annual debriefings and make summary and instruction on their duty performance in the year. The annual debriefings of independent directors should be disclosed separately on the SSE website at the same time when the relevant listed companies' annual reports are disclosed.
(IX). Audit Committees
Listed companies should separately disclose reports on their audit committees’ duty performance in the year, mainly including their fulfillment of duties and the convention of the audit committee meetings, on the SSE website at the same time when the listed companies' annual reports are disclosed, according to the “SSE Guidance on Operation of Audit Committees of Listed Companies’ Directorates”.
(X). Other Requirements
A listed company should complete the compiling of the annual report within two working days after the accounting firm issues the audit report, and submit the following documents to the SSE within two working days after the discussion and approval of the annual report by the board of directors:
1. Documents to be issued by the company
(1) The full text and abstract of the 2013 annual report signed by the incumbent legal representative of the company and sealed by the company;
(2) The announcement on directorate resolutions;
(3) The self-evaluation report on internal control (if applicable);
(4) The social responsibility report (if applicable);
(5) The directorate's special remarks on issues involved in the non-standard unqualified auditing opinions (if applicable);
(6) The directorate's special report on deposit and usage of funds raised in this year (if applicable);
(7) The directorate's remarks on change of accounting policies or estimations and modification of significant accounting errors (if applicable);
(8) The independent directors’ special remarks on the company’s outward guarantees;
(9) The independent directors’ opinions on issues involved in the non-standard unqualified auditing opinions (if applicable);
(10) The independent directors’ annual debriefings;
(11) The announcement on resolutions of the board of supervisors;
(12) The board of supervisors' opinion towards the directorate's special remarks on issues involved in the non-standard unqualified auditing opinions (if applicable);
(13) The board of supervisors' remarks on change of accounting policies or estimations and the modification of significant accounting errors (if applicable);
(14) The annual duty-fulfilling report of the audit committee;
(15) Other documents required by the CSRC and the SSE.
2. Documents to be submitted by the accounting firm
(1) The audited 2013 financial report of the company issued by the accounting firm;
(2) The special remarks of the accounting firm on capital occupation by the company’s controlling shareholder and its related parties;
(3) The special remarks issued by the accounting firm on issues involved in the non-standard unqualified auditing opinions (if applicable);
(4) The special examination report issued by the accounting firm on deposit and usage of the company's raised funds (if applicable);
(5) The remarks issued by the accounting firm on the changes of accounting policies or estimations and the modification of significant accounting errors (if applicable);
(6) The special examination report issued by the accounting firm on the realization of profit prediction in the significant assets reorganization (if applicable);
(7) The audit report issued by the accounting firm on the internal control of financial report (if applicable);
(8) Other documents required by the CSRC and the SSE.
3. The special verification and examination report issued by the sponsor institution on deposit and actual usage of the company's raised funds (if applicable).
4. Documents for Filing
(1) The directorate resolution, the written confirmation of the 2013 annual report signed by the company’s directors and senior managers, and the independent opinions signed by independent directors;
(2) The resolution of the board of supervisors and the written verification opinion on the 2013 annual report put forward by the board of supervisors in the form of its resolution;
(3) The XBRL instance documents of the 2013 annual report.
A listed company should file completely and correctly according to the requirements of relevant work memos of the SSE through the standard reporting system for listed companies’ information disclosure. The XBRL instance documents will be disclosed on the SSE website after being submitted by the relevant listed companies. The SSE will carry out aftermath verification on the XBRL instance documents and conduct assessment on the XBRL information collection filed by listed companies.
5. Submission Methods
Listed companies should submit the 2013 annual reports through the SSE company business management system according to the “No. 2 Memorandum for the Listed Companies’ Work on Day-to-day Information Disclosure: Guidance for the Information Disclosure Business”.
The SSE will implement aftermath examination on the 2013 annual reports of the listed companies. After receiving the examination opinions of the SSE, a listed company should provide timely written explanations on the issues involved, timely publish relevant supplementation and modification announcements in the designated newspapers and on the SSE website as required by the SSE, as well as disclose the full text of the modified 2013 annual report on the SSE website.
