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“Perfection of the legal system for listed companies is an important task for amending the ‘Securities Law’”, said Vice President Xu Ming of the Shanghai Stock Exchange (SSE) at the 4th SSE Legal Forum yesterday. He suggested that the mode of statutory conditions for securities’ listing should be changed, while some new listing systems, such as “Board Switch” and “Listing by Introduction” should be ushered in. Besides, efforts should be made to simplify conditions and procedures for refinancing and work out diversified modes of merger, acquisition, and reorganization.
“How to adapt to the marketization, legal construction, globalization of the capital market as well as restructure and perfect the legal system for listed companies is a key issue for amending the ‘Securities Law’”, said Xu. He also suggested that the legal system for listed companies should be consummated in terms of the systems of securities’ listing, listed companies’ information disclosure, listed companies’ refinancing, as well as merger, acquisition, and reorganization.
As for the improvement of the system of securities’ listing, Xu put forward the following two focuses. First, we should further deal with the relation between securities’ issuance and securities’ listing, and that between administrative regulation over listed companies and self-disciplinary management of listed companies. Moreover, we should change the mode of statutory conditions for securities’ listing. That is, the conditions for securities’ listing, listing suspension, listing termination, and others currently stipulated in the “Securities Law” should be specified in the listing rules made by relevant securities exchanges. Second, we should usher in new listing systems. It was suggested that eligible off-floor listed enterprises should be allowed to switch to exchanges for listing. Furthermore, some non-IPO listing ways in overseas markets, such as “Listing by Introduction” should be ushered in.
In addition, conditions and standards for delisting should be further rationalized. It would be necessary to add “Serious Law-breaking Behavior” as one of the conditions for delisting and take “Fraud Issuance”, “Illegal Disclosure of Significant Information”, and others recognized by competent authorities as triggers of delisting.
When it comes to the improvement of the system of listed companies’ information disclosure, Xu held that the guiding principles for the parties concerned to fulfill the obligation of information disclosure should be perfected. Timeliness and fairness, as well as authenticity, accurateness, and completeness, should be taken as fundamental principles of information disclosure in stipulations of the “Securities Law”.
Xu also added that investor-friendly requirements for the quality of information disclosure should be put forward, and facilitation of investors’ understanding should be taken as one of the standards for the quality of information disclosure. We should consider that pertinence and significance of information disclosure, completeness and accurateness of risk disclosure, understandability and readability of disclosed information should be enlisted into the information disclosure system of the “Securities Law”. Furthermore, legal validity of electronic disclosure should be acknowledged, in a bid to meet online investors’ need for quick access to information.
Xu said that the accountability on information disclosure should be strengthened. He advised that when amending the “Securities Law”, guiding and operational stipulations should be formulated for the responsibilities of infringements in the securities market, including scope of plaintiff, responsibility undertaker, and scope of compensation.
Concerning the optimization of the systems of listed companies’ refinancing as well as merger, acquisition, and reorganization, Xu gave the following three suggestions.
First, conditions and procedures for refinancing should be simplified. The requirement for financial indicators among issuance conditions could be cancelled, while the system of “Shelf Offering” could be introduced. Concerning the examination procedures, the examiner of listed companies’ refinancing could be changed to relevant securities exchanges, so as to elevate the efficiency of examination.
Second, we should work out diversified ways of merger, acquisition, and reorganization, and simplify examination procedures. The innovation of the systems of merger, acquisition, and reorganization in relevant laws, regulations, rules, regulatory documents should be refined into the “Securities Law”. The systems of indirect purchase and exemption from obligation of tender offer should be added. The system of squeezing out remaining shares should also be established, that is, any purchaser holding more than 90% shares in a listed company is allowed to make a mandatory acquisition towards remaining shares held by other shareholders.
Third, a market-oriented constraint system should be built. Listed companies, controlling shareholders, actual controllers, purchasers, and others should be guided to make promises about performances and others, and the regulation and accountability on fulfillment of promises should be cemented as well.
