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The Company Management Department of the Shanghai Stock Exchange (SSE) has recently issued and implemented the "Notice of Doing a Better Job in Equitable Information Disclosure by Listed Companies" to prevent institutions from accessing to operational data of listed companies before their public disclosure by way of taking advantage of the close ties with the listed companies. The notice stipulates clearly that to ensure equality of all investors of acquiring the same information, listed companies and relevant obligors of information disclosure shall disclose information publicly to all investors at the same time, instead of revealing or leaking out major information to individuals or part of the investors.
Now is the peak time for disclosure of annual reports. All kinds of research reports and exchange summaries on listed companies by various institutions are flooding the internet. Although most reports and summaries follow the principle of information disclosure to avoid describing the performance of listed companies, a few do have disclosed to the public the operational information of listed companies. Thus, the SSE Company Management Department has finalized the "Notice of Doing a Better Job in Equitable Information Disclosure by Listed Companies" to avoid asymmetry of information disclosed by listed companies.
The notice pointed out that listed companies and their staff shall not disclose any undisclosed information to the attendees when convening shareholders' meetings or receiving interviews and research visits. Directors, supervisors and the senior management of listed companies should inform the secretaries to directorate before accepting any interviews and research visits. In principle, the secretaries to directorate should participate in the interviews or research visits in the whole process. After an interview or a visit, the interview or visit taker should make a record in written form concerning the interview process and the content, sign, together with the interviewer, their names on the record to make confirmation, and ask the secretaries to directorate to file it to the "Section of Listed Companies" on the SSE website by sending written notices to them within two trading days.
The SSE encourages listed companies to disclose to the public their operational data of the previous month at the beginning of each month, and hold public explanation meetings after disclosure of periodical reports and important announcements, mainly internet meetings which help various investors, especially ordinary investors, to easily participate in the communication with the companies' senior management. Listed companies should, within two trading days after the meetings, file the meeting records to the "Section of Listed Companies" on the SSE website. The SSE will examine the trading of securities of the interview and visit institutions and their staff according to the interview and visit records filed by the listed companies.
The notice stressed that listed companies, together with staff from accounting firms, should do a good job in confidentiality of such information as the profit distribution scheme and the corporate performance before disclosure of their annual reports. In accordance with relevant regulations, a certified public accountant may be informed, at first, of the profit distribution scheme and asked to issue a draft of audit report based on the scheme (all financial data are confirmed except those related to distribution) before the scheme is submitted, as planned, to the directorate meeting for discussion if the directorate meeting is required to discuss the distribution issue. After the directorate makes resolution on the distribution, it should ask the certified public account to issue a formal audit report, on the basis of which the directorate will make resolutions on other relevant issues in the periodic report.
The notice also required that listed companies should effectively improve disclosure quality of annual reports and make full discussion on their future development in the "Management's Discussion and Analysis (MD&A)". In case of any major change in their production and operational environment, listed companies should, in a timely manner, throw daylight on the change's influence on them. If they need to amend the disclosed operational plan or others, they should announce the amended information in due time.
