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Today, the Shenzhen Stock Exchange (SZSE) released “Rules on Stock Listing (2008 Amendments) which is to be effective as of October 1, 2008.
Based on “Listing Rules (2006 amendments)”, the newly released Listing Rules are amendments to the “Stock Listing Rules” pursuant to the “Enterprise Bankruptcy Law”, the new accounting rules, features of all-circulative market and several other related bills. (Please refer to special column for listed companies on the official website of the Shenzhen Stock Exchange for specific information)
The Amendments adjusts spheres of applications and objects of listing rules with the view to be in line with internationalization of Chinese stock market and to provide space for overseas firms aiming at listing in China. Intermediates providing securities-related services to listed firms are considered as one of the objects of supervisions.
The Amendments requires timely report to stock exchange for any significant information between the company and its shareholders, actual controllers and other third parties on basis of accuracy, authenticity, completeness, timeliness, and fairness. Companies should have management systems on information disclosure and reveal information on the exchange’s website.
The Amendments urges enhancing on shareholders’ compliance on trading of company shares, and their sense of responsibility to disclose such information and to report to stock exchange for any shareholding change.
With approval from the exchange, shareholders and actual controllers are allowed to transfer shares to legal persons who are under the same actual controller or have actual controlling association within 36 months after the company’s IPO. The time limit of promise of non-transfer by a shareholder who acquires additional shares within 12 months before the initial release of prospectus is reduced from 36 months to 12 months.
Listed firms should set up information disclosure divisions within responsibility of the secretary of the board of directors, manage information disclosure and investor relationships and set higher working tasks for secretaries such as attending important company meetings and etc.
Senior management should draft reports periodically and submit to directors for review and signature who should not refuse to view the reports by any reason. Accountants should provide auditing suggestions to ensure timely information disclosure.
Reforms have also been taken on trading suspension system to improve market efficiency. One-hour trading suspension on annual report and performance forecast is cancelled and prominence is given to suspension incurred by untimely information disclosure, suspected illegitimacy and other irregularities.
Companies should give reason for failure to resume trading for every five days.
Clear requirements on delisting are given. Companies with less than 20 percent (10 percent for equity exceeding 4 00 million) shares holding by public shareholders should be suspended of trading and go to delisting procedures.
Special warning and business restriction are to be imposed on companies involved in illegitimate capital misappropriation and outside guaranty.
The amendments also regulate information disclosure on stock incentive plan and equity acquisition, and adjust financial indicators according to new accounting postulates and contents of statements and promises by seniors management.
