On September 11, 2024, Shanghai Stock Exchange (SSE) issued the Guidelines for Review of Bond Issuance and Listing on Shanghai Stock Exchange No. 5—Simplified Information Disclosure (hereinafter referred to as the Guidelines), which came into force on the date of promulgation. The Guidelines is expected to further improve the pertinence and effectiveness of information disclosure, reduce the cost of disclosure for high-quality issuers, and improve financing efficiency.
Information disclosure lies at the core of the registration-based issuance reform on the bond market. In recent years, the SSE has varied disclosure requirements based on the quality of issuers and raised the bar for market entry. On the one hand, high-quality issuers are encouraged to enhance the timeliness and effectiveness of disclosure with reduced cost. On the other hand, issuers with higher risks are required to followed tightened disclosure rules and offer detailed risk disclosure to provide basis for investors' effective decision-making. Based on existing practice and to further support good performers while keeping bad actors in check, the SSE formulated the Guidelines with an aim to reduce the disclosure burden for high-quality issuers and enhance the readability of the disclosure.
The Guidelines simplifies the disclosure arrangements for corporate bonds and asset-backed securities (ABS) issued by high-quality companies from filing applications to the retirement of the projects. It requires disclosure obligators to focus on important and relevant information that helps investors' value judgment. Companies suitable for such simplified disclosure include high-quality market participants, eligible issuers of science and technology innovation bonds and green bonds, and listed companies receiving A grade in information disclosure assessment for the recent two years. Three pieces of disclosure are simplified: First, application materials are simplified. Documents in similar nature, such as written confirmations signed by directors, supervisors, and senior management on application documents and prospectuses are integrated. Simplified templates are designed for issuance, listing and transfer applications. The Guidelines also specifies conditions under which the application can be accepted while missing certain documents. Second, bond prospectus and ABS plan prospectus are simplified. The Guidelines lists simplified disclosure matters in a table in each chapter. Well-known established issuers are allowed to briefly summarize the changes in semi-annual financial data in a list. Templates are provided to demonstrate the formats of brief and index-based disclosure, which helps standardize the simplified content. The Guidelines also clarifies the deadlines for submitting financial data of projects under review. Third, period reports before asset retirement are simplified. Some items are exempted from disclosure. Examples of index-based disclosures are provided.
The SSE will continue to strengthen the bond information disclosure system centered around enhancing debt repayment capacity under the guidance of China Securities Regulatory Commission. The SSE will keep drawing experience from its practice and respond promptly to reasonable suggestions from the market, so as to lay a solid institutional foundation for building a high-quality bond market.
