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On 31 December, 2020, SZSE officially released the Rules Governing Share Listing (2020 Revision), the Rules Governing the Listing of Shares on the Chinext of Shenzhen Stock Exchange, the Trading Rules of SZSE and Implementation Measures of Shenzhen Stock Exchange for the Relisting of Delisted Companies (collectively, the New Delisting Rules), which shall be implemented as of the date of issuance. SZSE spokesperson has answered questions of market concern from reporters.
I. What are the significance, background and purpose of SZSE’s New Delisting Rules?
Answer: The delisting system is an important basic system of the capital market. This round of reform in the delisting system is a key task in implementing the deployments of the Central Committee for Deepening Overall Reform and the Financial Stability and Development Committee under the State Council, and enforcing the overall plan of comprehensively deepening the reform of the capital market. It is a major step taken to build a regular delisting mechanism that suits the registration-based IPO system on the new development stage, an important arrangement to enhance the market resource allocation function and improve and stabilize the key system for delisting. It is of great significance to improve the quality of listed companies and protect the legitimate rights and interests of investors. Under the unified deployment and guidance of China Securities Regulatory Commission (CSRC), SZSE has revised and improved the relevant business rules on delisting.
First, as required by the new Securities Law, SZSE is committed to building a delisting mechanism that suits the concept of registration-based IPO system. The new Securities Law took effect this March, with relevant provisions on suspension and termination of listing removed, authorizing the exchanges to formulate relevant business rules on delisting. In August, the reform of the ChiNext Board and the pilot project of the registration-based IPO system were smoothly implemented, which is an important exploration and gaining useful experience for the reform of the existing basic systems of the capital market, including the delisting system. The registration-based IPO system of ChiNext Board is running smoothly and has withstood the test of the market by now. The delisting system has been revised following more diversified standards and streamlined procedures, matching the registration-based IPO system.
Second, SZSE is committed to speeding up the clearance of zombie companies and improving the quality of listed companies through market-oriented and law-based manners. Improving the quality of listed companies is of top priority for the capital market. Since 2012, three major reforms have been made in the delisting system, during which SZSE has made major breakthroughs in delisting practices. Our first delisting is based on modified opinions, the first delisting on account of major violations in the five safety areas, and the first delisting on account of nominal value. Since 2019, 18 companies have been forced to delist from SZSE, and the number of delisted companies through multiple channels has reached a record high. The delisting reform has been fruitful. However, compared with overseas well-developed markets, there are still some problems such as delisting standards being not reasonable enough and low delisting efficiency, which somehow restricts the improvement of the quality of listed companies as a whole. This reform of the delisting system directly targets the “deep-water zone”, revising the single continuous loss indicator to a composite indicator (the net profit before or after deducting the non-recurring profit and loss (whichever is lower) is negative and the operating income is lower than CNY 100 million), and taking “sustainable operation ability” as an important measure for delisting. In addition, the reform further expands the scope of delisting indicators such as information disclosure and major defects in standardized operation, striving to get rid of shell companies and zombie companies in an orderly manner
