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Shenzhen Stock Exchange (SZSE) promulgated the ChiNext Guidelines on Information Disclosure of Different Sectors No.1 – Engaging of Listed Companies in Radio, Film and Television Business (hereinafter referred to as "Guidelines") in January 2013, and revised it in February 2015. In order to further enhance the transparency of information disclosure of listed companies and strengthen investors’ understanding of listed companies, SZSE has recently completed the revision on the Guidelines by integrating the implementation situation and market development changes.
At present, with the fast development of domestic film-television industry, there are more and more high-box-office works, the way of cooperation in business and equity between listed companies and producer, director and actor is constantly innovated, and securitization of film-television stars has become the market heats. According to current market situation, as the key focus of investors, the box-office of film-television works of listed companies has an important effect on its share price in the secondary market, and the cooperation and bet on performance between listed companies and cast members have a significant impact on operation of listed companies, and the information disclosure requirements for the above matters have been stipulated in the original Guidelines.
Since box office is not necessarily equal to a company's operating revenue, however, if the company does not clearly state the exact influence of high box office on its operating revenue, investors may be misled. Moreover, the cooperation between listed companies and cast members often impact the companies' future operation and financial statements to some extent. In view of these situations, the revision requires listed companies disclose the range of operating revenue generated from high box office, stresses the difference between box office and actual operating revenue recognized by the companies, and asks the companies to give relevant risk warnings. Also, the revision exacts disclosure requirements on the cooperation between listed companies and cast members, including the parties' specific mode of cooperation, authorization matters and exclusive articles. As to matters on the market focus of celebrity securitization, apart from valuation basis and performance commitment, the revision also requires listed companies to offer statements on capital contribution and pricing basis for cast members' becoming of shareholders, compare with other investors' admission price, and explain whether the cast members have made specific cooperation arrangements.
In the process of guiding the revision, SZSE has stuck to moving forward the revision on industrial disclosure guidelines under the market-oriented principle. After soliciting opinions from relevant listed companies, SZSE discussed, revised and replied the feedback one by one and fully considered the balance between listed companies' trade secret protection and investors' information demand. In addition, for revision on the Guidelines, opinions from more than 3,500 investors were solicited. The solicited voices indicate that 83% investors would follow the disclosed box office data, that 76% investors would follow matters on the cooperation between companies and known cast members, and that 86% investors consider industrial information disclosure helpful for their investment decision-making and hope more relevant disclosure guidelines would be launched. The revision on the Guidelines caters to investors' need, which is to the benefit of improving transparency of information disclosure in the film and television industry.
SZSE will continue to take ChiNext as an entry point to study the industrial features and summarize regulatory experience so that it would constantly enhance the efficiency and pertinence of information disclosure to better serve investors.
