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Shenzhen Stock Exchange lately issued two memorandums on securities investment and major contracts of companies listed on the SME board, setting out specific regulations on information disclosure and relevant proceedings.
According to the Memo on Securities Investment, it is stated in clear terms that listed SMEs shall focus on developing their main businesses other than engage in stock investment, and that their investment activities will be put under intense supervision. In addition, the listed SMEs are required to set up special internal control systems before investing in domestic or overseas stocks, derivatives and fund products, and forbidden to use raised funds or bank loans for direct or indirect securities investment.
In addition, information disclosure should also be reinforced in the following two cases: securities investments worth over 10% of the company’s current audited net assets and over 50 million yuan in absolute value; or investment returns reaching more than 10% of its audited net profit and over 5 million yuan in absolute value. It is also required that a securities account and a capital account in the name of the listed company be set up for such investments, with related account information reported to the exchange.
The Memo on Major Contracts stipulates that listed companies shall disclosure contracts equivalent to over 30% of its total business revenue in the latest accounting year and 30 million yuan in absolute value, or contracts with estimated profit of over 30% of its total profit and 3 million yuan in absolute value in the latest accounting year. In addition, validation of contracts, major uncertainties, cancellation or termination of contracts should also be revealed accordingly.
