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SZSE has always been committed to standardizing the acts of share repurchase by listed companies and shareholding increase by directors, supervisors and senior management members, in a bid to boost companies’ confidence in development, stabilize market expectations and protect investors’ legitimate rights and interests. Since 2019, about 700 SZSE-listed companies have repurchased a total of nearly CNY 190 billion of their shares, and the directors, supervisors and senior management members of about 1,200 companies have bought a total of about CNY 22 billion shares to increase their shareholding. Among them, in this year, 275 companies have repurchased a total of CNY 45 billion shares and 216 companies’ directors, supervisors and senior management members have bought CNY 3.2 billion worth shares in total. The number has been increasing. As the enthusiasm of share repurchase and shareholding increase continues to run high, market entities are demanding the facilitation of such acts and the market vitality is expected to be further unleashed.
To make it more convenient for listed companies to buy back public shares and for relevant entities to increase their shareholding in listed companies and promote the healthy and stable development of the capital market, SZSE has revised the Business Guidelines for Self-discipline Regulation of Listed Companies No. 9 – Share Repurchase and the Business Guidelines for Self-discipline Regulation of Listed Companies No. 10 – Shareholding Movement Management (hereinafter collectively referred to as the share repurchase and movement rules) according to the overall plan of CSRC. SZSE is currently soliciting public opinions on those rules.
In this revision of the share repurchase and change rules, SZSE has, with a focus on three “relaxations”, further optimized the implementation conditions, improved the operation convenience, and responded to market concerns, aiming to energize the market and promote the healthy running of the capital market.
First, SZSE has relaxed the conditions when a listed company is allowed to repurchase shares for the sake of maintaining shareholder equity and company value. The condition that “the cumulative decline in the closing price of the company’s stock in 20 consecutive trading days reaches 30%” has been revised to that “the cumulative decline in the closing price of the company’s stock in 20 consecutive trading days reaches 25%”. That will help listed companies better maintain their value and their shareholders’ interests when the stock market is volatile.
Second, SZSE has relaxed the requirement on the duration of listing allowed for carrying out share repurchase by listed companies. After the revision, listed companies can repurchase their shares after being listed for six months or more, which was a year or more before the revision. It can therefore meet the share repurchase needs of newly listed companies.
Third, SZSE has relaxed window period restrictions. SZSE has cut the window period for share repurchase from within 10 trading days to within five trading days before the announcements of quarterly reports and performance forecasts. Meanwhile, SZSE has reduced the window period for directors, supervisors and senior management members to buy or sell shares of the listed companies from within 30 days to within 15 days before the announcements of annual reports or interim reports and from within 10 days to within five days before the announcements of quarterly reports, performance forecasts or preliminary earnings estimates. That will further improve the flexibility of share repurchase and shareholding increase.
The deadline for soliciting opinions is 28 October 2022. Any opinions will be appreciated. SZSE will carefully study and fully absorb the reasonable opinions and advice of market participants and make further revisions to the share repurchase and change rules.
Relevant officials of SZSE said that we will firmly implement the policy of “system building, non-intervention, and zero tolerance” and follow the principle of being market- and law-based. We will continue to improve relevant supporting rules and regulations based on regulatory practices, so as to provide better institutional guarantee for listed companies to implement share repurchase efficiently and for relevant entities to increase their shareholding in a compliant manner. Meanwhile, we will strengthen daily supervision of share repurchase and shareholding increase behaviors, and enhance information disclosure requirements. We will also crack down on securities-related acts in violation of laws such as insider trading and market manipulation and focus on preventing market risks to effectively protect small and medium investors’ interests.
