The new Securities Law officially becomes effective since 1 March 2020, marking the beginning of a new historical development phase of the Chinese securities market. The new Securities Law has provided rule-of-law guarantee for the high-quality development of listed companies and presented new tasks and requirements on the standard operation of listed companies. To do well in aligning with systems and adapting to new regulatory requirements after the New Securities is implemented, further refine the regulatory system of rules for listed companies and consolidate and enhance the institutional foundation for improving the quality of listed companies, SZSE recently revised and issued the Guidelines for the Standard Operation of Listed Companies (the “Guidelines”), which was effective since March 1.
In the revision, SZSE combined the two separate guidelines for the standard operation of the Main Board and the SME Board into one. The Guidelines is now applicable to companies listed on the Main Board and the SME Board. The guidelines for the standard operation of ChiNext companies remains different and will be revised along with the ChiNext reform. On that basis, the revision followed a market-oriented and rule-of-law-based reform direction, adhered to on the principle of information disclosure as the core, summed up newly-learned experience, addressed new situations and made improvements in four aspects under the full consideration of the execution effects of higher laws and regulations and existing policies.
“Seamless alignment”: doing well in the establishment of supporting system for implementing the new Securities Law. SZSE refined provisions on seven aspects, namely, disclosure of short-swing trading, information disclosure channels, situations for extraordinary reporting, voluntary information disclosure, scope of insiders, open solicitation for shareholder rights, and disclosure of changes in equity. SZSE also released announcement formats, laid down clear disclosure requirements such as on a 1% increase or decrease in big shareholders’ shareholding ratio and emphasized that the information needed by investors for value judgment and investment decision-making shall be fully disclosed, ensuring orderly alignment with relevant requirements of the new Securities Law.
“Burden alleviation”: assisting listed companies in “easing burdens”. On the one hand, SZSE cut out the superfluous, refining regulatory requirements and giving more autonomy to the market in the capital use during the fundraising and capital flow replenishment period and in the governance of companies listed on the SME Board etc. On the other hand, SZSE gathered parts into a whole, absorbing and integrating over 20 provisions of business rules and guideline memorandums, and built a user-friendly “set of specifications” that are easy to query and abide by to improve the quality of regulatory services.
“Precise regulation”: focusing on major fields and “key minorities”. SZSE strengthened the oversight over high-risk fields such as external guarantee, fulfillment of business performance and goodwill impairments, enhanced the disclosure of situations when a controlling shareholder or de facto controller losing contact, being investigated or subject to coercive measures or severely punished and so on, and the independence requirement of its related parties, and further improved frontline regulatory efficiency.
“Advancing with the times”: meeting new market situations and new demands. On the basis of implementing pilot projects in the real estate and energy conservation & environmental protection industries, SZSE promoted “guarantee limit” across the board and allowed listed companies to make limit forecasts when providing guarantee to their controlled subsidiaries or joint or united companies. SZSE also canceled the review of the qualification of director, supervisor and senior management candidates by the Board of Directors and the Supervisory Committee, strengthened commitment restriction and public scrutiny, and enhanced the adaptability of rules to market development and changes in policies.
Earlier, in line with the principle of “establishing rules in an open, democratic fashion”, SZSE sought advice on the revision of the Guidelines from all companies listed on the Main Board and the SME Board and received 28 pieces of advice. On the whole, the participants recognized the basic thinking and main content of the revision and put forward some refining suggestions. After careful studies, SZSE adopted 14 reasonable and feasible pieces of advice.
SZSE will continue to put in place all work concerning the new Securities Law, do well in the learning, training, publicity and interpretation of the new laws and regulations, and accelerate establishing a “streamlined and efficient” system of regulator system of rules for listed companies. We will also improve basic policies of the capital market, further enhance market transparency and efficiency and create a good legal environment for carrying out the task of deepening the sweeping reform of the capital market and promoting the high-quality development of listed companies.
