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In order to implement the spirit of the 19th CPC National Congress, the CPC Central Committee, and the State Council, tap on the multi-tiered capital market to serve the real economy and strengthen its internationalization, SZSE officially issued on June 15 the Implementation Measures on the Listing and Trading of Pilot Innovative Companies’ Shares or Depositary Receipts (hereinafter referred to as the Implementation Measures), and the Notice on Amendments to Articles 1.1 and 1.2 of the Rules Governing Share Listing on SZSE, the Implementation Rules on the Online Offering of IPO in the SZSE Market (Revised in 2018), the Implementation Rules on the Offline Offering of IPO in the SZSE Market (Revised in 2018), the Guidelines on the Content and Format of Listing Announcements of Red-chip Companies’ Depositary Receipts in SZSE, the Mandatory Provisions on Risk Disclosure Statement for the Trading of Shares or Depositary Receipts of Pilot Innovative Companies, and the Working Rules of the Listing Committee of Shenzhen Stock Exchange (Revised in 2018). These business rules are made according to such departmental regulations and normative rules as China Securities Regulatory Commission’s Notice on Several Opinions on the Pilot Domestic Offering of Shares or Depositary Receipts by Innovative Companies Distributed by the General Office of the State Council (hereinafter referred to as Several Opinions) and the CRSC’s Administration Measures for the Offering and Trading of Depositary Receipts (Trial) and come into force as from the date of issuance.
The issuance of the Implementation Measures and other supporting rules to support the listing of innovative enterprises in the domestic market reflects a practical action of SZSE in implementing our national strategies, fulfilling the capital market’s fundamental mission to serve the real economy, and building a multi-tiered capital market with international competitiveness. These measures can improve the quality of listed companies and enable domestic investors to share the fruits of innovative companies. This will further unleash the synergies of capital accumulation, build an innovation capital formation center, and enhance the international level and global reach of China’s capital market.
The Implementation Measures is the basic business rules of the SZSE for the listing and trading of shares or depositary receipts of pilot innovative companies. Within the scope of the current Securities Law, it is aimed at standardizing the listing of pilot innovative enterprises and maintaining the order of the securities market. Oriented with risk prevention and investor protection, it makes specific institutional arrangements for the listing, trading, and information disclosure of pilot innovative enterprises’ shares or depositary receipts. As an important institutional innovation for the capital market to serve the real economy, the following principles are strictly observed during the drafting of the Implementation Measures:
First, to combine strict regulations with prudential differentiated oversight. While strictly following rules and regulations such as the Securities Law and the Several Opinions, SZSE made prudential considerations to pilot innovative companies’ differences in corporate governance and other aspects so as to coordinate the different regulatory requirements of ordinary listed companies and pilot innovative enterprises and balance investor protection and business development requirements. Within the framework of the existing laws and regulations, differentiated regulatory arrangements are made for pilot innovative companies.
Second, to combine international best practice with China’s reality. The depositary receipts system fully draws on international practices, in which the trading system is comparable to A-shares, and overseas-based securities issuers assume the responsibilities of listed companies under the Securities Law. And to coordinate the periodic pilot needs and the long-term market development needs, the Implementation Measures, taking into account our national conditions, sets institutional arrangements on the conversion requirements and disclosure of depositary receipts according to the market environment and habitual supervision practice in China.
Third, to stick to combining information disclosure with the protection of investors’ legitimate rights and interests. The innovative enterprises involved in the pilot program may feature the following special conditions: specific operation risks, red-chip companies’ differentiated voting right and agreement control framework. With these situations considered, the interested pilot enterprises’ information disclosure responsibilities and risk disclosure will be intensified and the requirements on investor protection will be implemented throughout all business links such as listing, trading, and continual information disclosure.
When issuing the Implementation Measures, SZSE has also developed and amended a series of supporting systems based on the need in pilot work. On the one hand, the shares or depositary receipts of pilot innovative enterprises are included in the applicable scope of relevant rules. This is to effectively connect with the existing business rule systems, ensure the aforesaid business links are evidenced- and rule-based. On the other hand, special arrangements are made according to the difference between the shares or depositary receipts of pilot innovative enterprises and the common shares, with relevant risks being highlighted for reminder. Also, pilot innovative enterprises’ shares or depositary receipts are categorized into the front-line supervision of SZSE to consolidate member responsibility, stress risk prevention and enhance investor protection.
In order to facilitate the smooth and stable implementation of the pilot work, SZSE has previously carried out a series of business and technical preparations and worked with all market players to launch technical system reforms and organize special tests. At present, those preparations have been in place at large. Next, under CSRC’s unified leadership and deployment, SZSE will strengthen front-line supervision responsibilities, enhance risk prevention and control capabilities, continue to interpret relevant rules, earnestly conduct investor education, actively offer services for market incubation and fully ensure pilot projects be carried out smoothly. And, SZSE will take the opportunity of supporting pilot projects of innovative companies to create a world-leading innovation capital formation center and help the real economy deliver quality development.
