XINHUA, Beijing :
While fast-tracking listing approval for tech giant Foxconn Industrial Internet, the Chinese securities regulator is also showing the door to underperforming companies, with tougher delisting rules.
Since March, the China Securities Regulatory Commission (CSRC) and stock exchanges have released draft rules that will force companies to exit the equity market for serious law violations.
Earlier this month, the CSRC promised that China would step up efforts to delist “zombie companies” and those with long-term losses and severely poor financial status.
The regulator will also strengthen the responsibilities of stock exchanges in establishing and implementing delisting rules to improve the quality of listed companies and protect investor interests.
A week later, the Shanghai and Shenzhen stock exchanges responded with detailed draft rules, stipulating that companies will be ousted from the market if found of fraudulent initial public offerings, cheating in financial disclosures or law violations.
Asked whether the new delisting rules will lead to an increase in market exits, CSRC vice chairman Jiang Yang said that everything should be done according to related laws and regulations.
The move came amid tougher market oversight and severer punishment for illegal trading in recent years, especially after the market rout in 2015 that shattered confidence among the country’s stock investors, most of whom are retail traders with little financial expertise.
While rapidly growing in size, the A-share market is struggling with problems such as inadequate implementation of delisting policies, which keeps dysfunctional companies in the field and undermines market confidence.
Since the first delisting in 2001, China’s A-share market has only seen 57 firms exit the market despite a reform of delisting rules in 2014, according to Wind, an information service provider.
Without strict regulation, companies could easily inflate their financial sheets to avoid delisting warnings.
While fast-tracking listing approval for tech giant Foxconn Industrial Internet, the Chinese securities regulator is also showing the door to underperforming companies, with tougher delisting rules.
Since March, the China Securities Regulatory Commission (CSRC) and stock exchanges have released draft rules that will force companies to exit the equity market for serious law violations.
Earlier this month, the CSRC promised that China would step up efforts to delist “zombie companies” and those with long-term losses and severely poor financial status.
The regulator will also strengthen the responsibilities of stock exchanges in establishing and implementing delisting rules to improve the quality of listed companies and protect investor interests.
A week later, the Shanghai and Shenzhen stock exchanges responded with detailed draft rules, stipulating that companies will be ousted from the market if found of fraudulent initial public offerings, cheating in financial disclosures or law violations.
Asked whether the new delisting rules will lead to an increase in market exits, CSRC vice chairman Jiang Yang said that everything should be done according to related laws and regulations.
The move came amid tougher market oversight and severer punishment for illegal trading in recent years, especially after the market rout in 2015 that shattered confidence among the country’s stock investors, most of whom are retail traders with little financial expertise.
While rapidly growing in size, the A-share market is struggling with problems such as inadequate implementation of delisting policies, which keeps dysfunctional companies in the field and undermines market confidence.
Since the first delisting in 2001, China’s A-share market has only seen 57 firms exit the market despite a reform of delisting rules in 2014, according to Wind, an information service provider.
Without strict regulation, companies could easily inflate their financial sheets to avoid delisting warnings.
