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In order to further regulate the information disclosure behaviors of listed companies engaged in livestock breeding and aquaculture, solid mineral resources and real estate business, Shenzhen Stock Exchange (“SZSE”) recently formulated and promulgated Shenzhen Stock Exchange Industry Information Disclosure Guideline No.1 - Livestock Breeding and Aquaculture Business Related Listed Companies (“No.1 Guideline”), Shenzhen Stock Exchange Industry Information Disclosure Guideline No.2 - Solid Mineral Resources Business Related Listed Companies (“No.2 Guideline”) and Shenzhen Stock Exchange Industry Information Disclosure Guideline No.3 – Real Estate Business Related Listed Companies (“No.3 Guideline”).
Information disclosure is the basic system for building open and transparent capital market, standardizing behaviors of market main bodies and protecting investors’ legal rights and interests. With the development of capital market, the traditional and generally applicable information disclosure rules have been difficult to adapt to different information disclosure requirements for listed companies of different industries. In recent years, SZSE has earnestly implemented the regulation transformation deployment of China Securities Regulatory Commission (“CSRC”), focused on information disclosure and taken investors demands as orientation, so as to steadily push forward industrial regulation and make all efforts to improve the effectiveness and pertinence of information disclosure of listed companies. Now the overall proportion of industrial regulation companies listed in SZSE has reached 55%, SZSE main board listed companies have been overall implemented the industrial regulation since August 24, 2015, SME board and ChiNext board listed companies are also actively promoting the overall industrial regulation. Combining with the practical experience of industrial regulation, SZSE has formulated, revised and promulgated seven industry information disclosure guidelines for ChiNext board listed companies that are engaged in radio, film and television, pharmaceutical and biological products, internet game and other business since the beginning of this year. The promulgation of information disclosure guidelines for livestock breeding and aquaculture, solid mineral resources and real estate industries is an important measure of SZSE to further consolidate the self-discipline regulation system of multi-level capital market, improve information disclosure quality of listed companies and release the vitality of market main bodies.
As introduced by related officer of SZSE, the above guidelines have regulated the information disclosure obligations that should be fulfilled by listed companies from many aspects such as regular reports and interim reports, value and risk, financial information and non-financial information, so as to guide listed companies to fully disclose the macro economic trends and policies with influence on industrial development, business modes, industry positions, business situation, existing risks and other relevant information. Meanwhile, combining with the actual situation and investors demands of different industries, the guidelines have focused on different contents required for disclosure.
Livestock breeding and aquaculture industry is featured by distinctly different operation and breeding mode, highly difficult biological assets inventory and great industry cyclical fluctuation, No.1 Guideline has made clear requirements for these characteristics. Firstly, as for different connotation and risks for different operation and breeding modes, it requires listed companies to disclose the detailed contents, special risks and change situation of operation and breeding modes; secondly, as for highly difficult biological assets inventory for breeding industry and other characteristics with more concerns from investors, it requires listed companies to disclose the specific inventory scheme and cost carrying-forward method in their annual report and semi-annual report respectively; thirdly, as for the distinct price cyclical fluctuation for terminal products of breeding industry and great business performance fluctuation, it requires listed companies to disclose the sales volume and sales revenue on the monthly basis.
As for solid mineral resources business related listed companies, whether they can conduct normal business depends on their possession of relevant mining exploration and development qualification and access conditions, which constitutes significant impacts on their company value, No.2 Guideline has refined the disclosure requirements for the above information, and required listed companies to offer full risk warning as well as reinforced the audit responsibility of lawyers and other intermediary institutions for relevant business. Moreover, it also encourages listed companies to fully disclose other information that isn’t clearly required to disclose but has significant influence on investors’ investment decisions.
Real estate industry is greatly affected by national regulation and control policies and financial environment, and it has distinct regional characteristics and significant industry characteristics in accounting policies. Therefore, on one hand, No.3 Guideline requires listed companies to fully disclose the industry-related macro-economic situation and financial taxation policies, industry development situation of the city where their main business is located, their competitive advantages, market positions, future development strategies and operation plans, etc., and encourages them to disclose the operational data reflecting the characteristics of real estate industry on the monthly basis; on the other hand, it requires listed companies to fully disclose specific accounting policies on revenue recognition, inventories, investment real estate and others that are related with the characteristics of real estate industry.
In addition to strengthening information disclosure obligations, SZSE has also adjusted the applicability of rules for industry companies based on the practical experience of industrial regulation and principles of combining decentralization with administration and combining severity with leniency, so as to fully release the vitality of market main bodies with risks under control. For examples, according to the business characteristics of real estate companies, the requirements for disclosure and examination on guarantee of listed companies for controlled subsidiaries is loosened; on the premise of meeting specific situation, the guarantee of listed companies for controlled subsidiaries may be submitted to shareholders’ general meetings for examination in the form of guarantee quota, the guarantee amounts for different guaranteed objects may be adjusted within the total guarantee quota in the subsequent implementation, which will improve the operating efficiency of listed companies. Moreover, it also refines the information disclosure requirements for land reserves, project development progress and financing situation of real estate companies, which fully reflects the industrial characteristics.
It’s known that the formulation process of the above information disclosure guidelines have fully reflected the principles of democracy and publicity. After the completion of first draft, SZSE immediately solicited comments and suggestions from all listed companies, and carried out face-to-face communication with them by the way of symposium, etc.. After serious collation and study, many opinions from listed companies have been included into the final draft.
Related officer of SZSE said, SZSE would continue to push forward industrial regulation, study on the industry characteristics, sum up regulation experience, so as to constantly improve the effectiveness and pertinence of information disclosure of listed companies through rules construction and active guidance, and further promote the healthy development of SZSE multi-level capital market.
