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In a bid to regulate accounting changes made by listed companies and curb such abuses for profit manipulation, the Shenzhen Stock Exchange on October 10 issued the No.7 Guidelines for Information Disclosure on Changes in Accounting Policies and Accounting Estimates, setting out different approval procedures for changes in accounting policies incurred by compulsory regulations, proprietary accounting policies, and accounting estimates.
According to the Guidelines, listed companies shall submit special audit reports to the general meeting of shareholders prior to disclosure of regular reports upon approval of the board, under any of the following circumstances:- The aforesaid changes might affect the net profit of over 50% in regular reports;
- The aforesaid changes might affect the shareholder equity of over 50% in regular reports;
- The aforesaid changes might affect profitability of the company concerned.
- In addition, during the session of shareholders¡¯ general meetings, listed companies must provide online voting channels for investors.
The highlight in the Guidelines is the adoption of the financial figures to be disclosed as a comparison base, which also indicates the bourse¡¯s efforts to adapt to the new market supervision environment. Sources with the stock exchange said this move aimed to clamp down on malicious abuses of accounting changes without increasing the costs of compliant companies.
