(Photo courtesy of Hero)
On April 12, a number of new regulations in the capital market were released intensively.
1. The State Council recently issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", which consists of 9 parts. This is the third "National Nine Articles" in China's capital market.
2. The China Securities Regulatory Commission (CSRC) has issued 6 draft rules for public comment, involving 6 draft rules for issuance supervision, listed company supervision, securities company supervision, and transaction supervision.
3. The Shanghai Stock Exchange and the Shenzhen Stock Exchange have successively issued a number of rules for public comment, improving the institutional arrangements for issuance and listing, information disclosure, share reduction, dividends, delisting, etc., and strengthening the cohesion and coupling of various business links such as stock issuance and listing review, issuance and underwriting, continuous supervision of listed companies, and delisting, as well as various new rules and new requirements.
The Shanghai and Shenzhen Stock Exchanges collectively announced the simultaneous adjustment of the Stock Connect trading information disclosure mechanism.
The latest deployment of the State Council, the capital market "National Nine Articles" is coming //
The State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", which consists of nine parts. This is the first time in 10 years that the State Council has issued a guiding document on the capital market after the two "National Nine Articles" in 2004 and 2014, and the nine highlights are worth paying attention to.
These include:
1. The high-quality development of the capital market must adhere to the "five musts";
2. Iterative upgrading of the issuance and listing system;
3. Formulate guidelines for the management of market value of listed companies;
4. Improve the investor compensation and relief mechanism in the process of delisting;
5. Improve the salary management system of the securities and fund industry;
6. Strengthen the construction of strategic force reserves and stabilization mechanisms;
7. Optimize the policy environment for equity investment of insurance funds;
8. Promote the development of new quality productive forces;
9. The construction of the rule of law in the capital market is expected to accelerate.
The "Opinions" put forward that in the next five years, an overall framework for the high-quality development of the capital market will be basically formed. The institutional mechanism for investor protection has been further improved. The quality and structure of listed companies have been significantly optimized, and the strength and service capabilities of securities, funds and futures institutions have continued to increase. The regulatory capacity and effectiveness of the capital market have been greatly improved. The formation of a sound ecology of the capital market has been accelerated.
The "Opinions" require that the issuance and listing system be further improved. Raise the listing standards of the main board and the Growth Enterprise Market, and improve the evaluation standards for the scientific and technological innovation attributes of the Science and Technology Innovation Board. Improve the quality and efficiency of issuance and listing counseling, and expand the coverage of on-site inspections of enterprises under review and related intermediaries. It is clear that the dividend policy should be disclosed when listing. Situations such as pre-listing surprise "clearance" dividends will be included in the negative list for issuance and listing. Strictly supervise spin-offs and listings. Strict refinancing review and control. Strengthen the responsibility of the whole chain of issuance and listing. Further consolidate the main responsibility of the exchange for review, improve the establishment and operation mechanism of the stock listing committee, and strengthen the supervision of the whole process of committee members' performance of duties. Establish a mechanism for retrospective accountability and accountability for audits. Further consolidate the primary responsibility of issuers and the "gatekeeper" responsibilities of intermediaries, and establish a "blacklist" system for intermediaries. Adhere to the principle of "declaration is responsibility", and strictly investigate illegal issues such as fraudulent issuance.
The "Opinions" require that the supervision of delisting be strengthened. Deepen the reform of the delisting system, and accelerate the formation of a normalized delisting pattern that should be withdrawn and cleared in a timely manner. Further tighten the criteria for mandatory delisting. Establish and improve the differentiated delisting standard system for different sectors. Scientifically set up the scope of application for major illegal delisting. Tighten financial delisting indicators. Improve market capitalization standards and other trading delisting indicators. Intensify the implementation of standardized delisting. Further unblock diversified delisting channels. Improve policies and regulations such as absorption and merger, and encourage and guide leading companies to increase the integration of listed companies in the industrial chain based on their main business. Further reduction in the value of "shell" resources. Strengthen the supervision of mergers and acquisitions, strengthen the relevance of the main business, strictly control the quality of injected assets, increase the supervision of "backdoor listing", and accurately crack down on all kinds of illegal "shell" behaviors.
The "Opinions" make it clear that we will vigorously promote the entry of medium and long-term funds into the market, continue to expand the strength of long-term investment, establish a market ecology that cultivates long-term investment, improve the basic system for long-term investment, and build a policy system that supports "long-term money and long-term investment". Vigorously develop equity public funds, and greatly increase the proportion of equity funds. Establish a fast-track approval channel for exchange-traded funds (ETFs) to promote the development of indexed investment. Comprehensively strengthen the investment and research capacity building of fund companies, enrich the types of investable assets and investment portfolios of public funds, and transform from scale-oriented to return-oriented for investors. Steadily reduce the comprehensive rate of the public fund industry, and study and standardize the remuneration system of fund managers. Revise the classification and evaluation system for fund managers, and urge the establishment of rational investment, value investment, and long-term investment concepts. Support the steady development of private securities investment funds and private asset management business, and enhance the stability of investment behavior.
CSRC's new regulations "6 consecutive issuances" //
The China Securities Regulatory Commission reported on April 12 that in order to thoroughly implement the spirit of the Central Financial Work Conference and the "Several Opinions of the State Council on Strengthening Supervision and Risk Prevention and Promoting the High-quality Development of the Capital Market" (hereinafter referred to as the "Several Opinions"), and promote the formation and implementation of the "1+N" policy system in the capital market, the China Securities Regulatory Commission has formulated and successively issued relevant supporting policy documents and system rules, and is now soliciting public opinions on 6 draft rules involving issuance supervision, listed company supervision, securities company supervision, transaction supervision, etc.
【Issuance Regulation】
Includes 2 rule amendments.
The first is to revise the "Guidelines for the Evaluation of Scientific and Technological Innovation Attributes (Trial)".
In order to implement the requirements of the "Several Opinions" on strictly controlling the entry of issuance and listing, and improving the evaluation standards for the attributes of science and technology innovation on the Science and Technology Innovation Board, higher standards are set for the amount of R&D investment, the number of invention patents and the growth rate of operating income of enterprises applying for the Science and Technology Innovation Board, and the requirements for measuring indicators such as scientific research investment, scientific research achievements and growth are strengthened, so as to further guide intermediaries to improve the quality of the enterprises applying for the Science and Technology Innovation Board, and highlight the "hard technology" characteristics of the Science and Technology Innovation Board.
Specifically, the first paragraph of Article 1 of the "Guidelines" "the amount of R&D investment in the last three years" is adjusted from "cumulative more than 60 million yuan" to "cumulative more than 80 million yuan", the third item "invention patents applied to the company's main business" is adjusted from "more than 5" to "more than 7", and the fourth item "compound growth rate of operating income in the last three years" is adjusted from "reaching 20%" to "reaching 25%".
The second is to revise the "List of Random Items to be Checked by the China Securities Regulatory Commission".
In order to implement the requirements of the "Several Opinions" on expanding the coverage of on-site inspections of enterprises under review and related intermediaries, the proportion of random inspection of IPO enterprises will be significantly increased from 5% to 20%, and the proportion of problem-oriented on-site inspections and on-site supervision of the exchange will be increased accordingly, and after the adjustment, the overall proportion of on-site inspection and supervision will not be less than one-third.
[Supervision of listed companies]
Including 1 rule formulation and 1 rule amendment.
The first is to formulate the "Administrative Measures for the Reduction of Shareholdings by Shareholders of Listed Companies".
The original "Several Provisions on the Reduction of Shareholdings by Shareholders, Directors, Supervisors and Senior Executives of Listed Companies" was upgraded to the "Administrative Measures for the Reduction of Shareholdings by Shareholders of Listed Companies", which was promulgated in the form of regulations of the China Securities Regulatory Commission.
In terms of content, the basic framework of the original shareholding reduction regulations remains unchanged, and at the same time, in combination with the key concerns of all parties, targeted improvements have been made in strictly regulating the shareholding reduction of major shareholders, effectively preventing detour shareholding reduction, refining the liability clauses for violations, and strengthening the obligations of key entities.
The second is to revise the "Rules for the Management of the Company's Shares Held by Directors, Supervisors and Senior Managers of Listed Companies and Their Changes".
Absorb and integrate the requirements of the original shareholding reduction regulations to regulate the shareholding reduction of directors, supervisors and senior executives, and further clearly stipulate that all parties shall jointly abide by the original shareholding reduction restrictions after the divorce and division of shares.
【Supervision of securities companies】
The main purpose is to revise the "Provisions on Strengthening the Supervision of Listed Securities Companies", aiming to give full play to the leading and exemplary role of listed securities companies in promoting the high-quality development of the industry by strengthening supervision.
Highlights include:
Urge the company to correct its business philosophy, put functionality in the first place, and focus on serving the real economy and residents' wealth management and other main responsibilities;
Give full play to the effectiveness of modern corporate governance, strengthen internal checks and balances, improve personnel management, optimize incentives and constraints, and strengthen the management and control of domestic and foreign subsidiaries;
Implement comprehensive risk management and compliance requirements for all employees, and strengthen the disclosure of information on risk control indicators;
Carry out financing reasonably and prudently, improve the efficiency of capital utilization, and enhance investor returns.
[Transaction supervision]
The Provisions on the Administration of Programmatic Trading in the Securities Market (for Trial Implementation) were formulated.
The first is to clarify the definition and overall requirements of programmatic transactions.
The second is to clarify the reporting requirements.
The third is to clarify the requirements for transaction monitoring and risk prevention and control.
Fourth, strengthen the management of information systems.
Fifth, strengthen the supervision of high-frequency trading.
Sixth, clarify the supervision and management arrangements.
Seventh, it is clarified that Northbound programmatic transactions shall be included in the reporting management in accordance with the principle of consistency between domestic and foreign investment, and the transaction monitoring standards shall be implemented, and other management matters shall be subject to these Provisions by reference.
Shanghai and Shenzhen and other exchanges issued new rules //
(Photo courtesy of Hero)
On April 12, the Shanghai and Shenzhen Stock Exchanges simultaneously solicited opinions from the public on specific business rules such as the "Rules for the Review of Stock Issuance and Listing" and the "Stock Listing Rules", involving the improvement of listing conditions, the standardization of shareholding reduction, and the strict delisting standards.
On the same day, the Shanghai-Shenzhen-Hong Kong Stock Exchange announced that it would adjust the information disclosure mechanism of Stock Connect transactions simultaneously.
After the amendment, the Stock Connect:
When the quota balance is greater than or equal to 30%, the quota is sufficient, and when it is less than 30%, the quota balance will be announced in real time.
After the market closes each day, the total trading volume and total number of transactions of Northbound Stock Connect, the total trading volume of ETFs, the list of the top 10 actively traded securities (including ETFs) and their total trading volume of the day will be disclosed, and the summary of the aforementioned data will be announced on a monthly and annual basis.
On the 5th trading day of each quarter, the aggregate holdings of individual securities and SSE investors and the holdings of each HKSCC Participant at the end of the previous quarter will be announced.
For Hong Kong Stock Connect:
When the quota balance is greater than or equal to 30%, the quota is sufficient, and when it is less than 30%, the quota balance will be announced in real time.
During the trading period, the transaction amount and total transaction amount of buying and selling will be announced. After the market closes on a daily basis, the daily market closes the day's buy transaction amount and number of transactions, the total amount of selling transactions, the total number of ETFs, the list of the top 10 actively traded securities (including ETFs) and their buy transaction amounts, sell transaction amounts and total trading amounts, and publishes the summary of the aforesaid post-closing data on a monthly and annual basis. Disclose the total number of shares held by Hong Kong Stock Connect investors for a single security after the market closes each day.
The Shanghai-Shenzhen-Hong Kong Stock Exchange divides the above trading information disclosure arrangements and discloses them on their respective official websites. The Shanghai and Shenzhen Stock Exchanges said that in order to reserve sufficient time for the market to debug and transition and ensure that all market participants are fully prepared, the adjustment will be carried out in two stages: in the first stage, the Hong Kong Stock Exchange will complete the adjustment of the real-time trading information in the Shanghai and Shenzhen Stock Connect, which is expected to be implemented in one month, and in the second stage, the Shanghai and Shenzhen Stock Exchanges will simultaneously complete the adjustment of the disclosure of other trading information, which is expected to be implemented three months after the completion of the first phase.
As of the end of March 2024, Stock Connect securities accounted for more than 90% of the market capitalization of the A-share market, and Hong Kong Stock Connect stocks accounted for more than 80% of the market capitalization of the Main Board of the Stock Exchange.
[Listing threshold on the main board of the Shanghai Stock Exchange: net profit has risen to 100 million yuan in the past year] The Shanghai Stock Exchange has revised the relevant supporting business rules and solicited public opinions, which intends to increase the listing conditions of the main board. According to the revised "Stock Issuance and Listing Review Rules" of the Shanghai Stock Exchange, the indicators of net profit, net cash flow, operating income and market value of the main board have been raised. Specifically: first, the cumulative net profit index in the last three years in the first set of listing standards has been increased from 150 million yuan to 200 million yuan, the net profit index in the past year has been increased from 60 million yuan to 100 million yuan, the net cash flow index generated by cumulative operating activities in the past three years has been increased from 100 million yuan to 200 million yuan, and the cumulative operating income index in the last three years has been increased from 1 billion yuan to 1.5 billion yuan. The second is to increase the net cash flow from cumulative operating activities in the last three years in the second set of listing standards from 150 million yuan to 250 million yuan. The third is to increase the estimated market value index in the third set of listing standards from 8 billion yuan to 10 billion yuan, and the operating income index in the last one year from 800 million yuan to 1 billion yuan. At the same time, the "Rules for the Review of Stock Issuance and Listing" further clarifies the positioning of the main board, and puts forward detailed requirements for the industry status of issuers. The revised listing conditions on the Main Board are intended to come into effect from the date of promulgation of the new Listing Rules, and the new listing conditions shall apply to enterprises to be listed on the Main Board that have not yet passed the deliberation of the Listing Committee, and the listing conditions before the amendment shall apply to those that have passed the deliberation of the Listing Committee. For companies that have not passed the review of the Listing Committee and do not meet the new listing conditions, the SSE will guide them to re-apply for listing on other suitable boards. The SSE will also simultaneously revise the Interim Provisions on the Application and Recommendation of the Issuance and Listing of Enterprises on the Sci-Tech Innovation Board to further improve the criteria for grasping the positioning of the Sci-Tech Innovation Board, and support and encourage "hard technology" enterprises to issue and list on the Sci-Tech Innovation Board.
In addition, the newly revised Rules for the Review of Stock Issuance and Listing also focus on consolidating the reporting responsibilities of issuers, intermediaries, and exchanges. Specifically, to further improve the quality of declaration, prevent and control "sick declaration", on the basis of the original provisions of 2 times within 1 year and other circumstances, add "one check and remove" and "one supervision and revoke" to add the situation of "one check and remove", and set a 6-month declaration interval. Intermediaries are required to make full use of methods such as capital flow verification, customer and supplier penetrating verification, on-site verification, etc., to ensure that the financial data conforms to the real business situation, and take the relevant requirements as the key focus of the review.
["Shell resources" are difficult to have a future]
In line with the amendment to the listing conditions of the main board, the Shanghai Stock Exchange will raise the listing conditions for the reorganization of the main board.
On April 12, the Shanghai Stock Exchange issued the revised Rules for the Review of Major Asset Restructuring of Listed Companies on the Shanghai Stock Exchange and the Administrative Measures for the Listing Review Committee and the M&A and Restructuring Review Committee of the Shanghai Stock Exchange, and solicited public comments.
In order to further strengthen the supervision of restructuring and listing and reduce the value of "shell resources", the Shanghai Stock Exchange intends to raise the conditions for listing on the main board in accordance with the amendments to the listing conditions of the main board in the Rules for the Listing of Stocks on the Shanghai Stock Exchange.
According to the new rules, if a company listed on the main board undergoes restructuring and listing, the underlying assets shall meet the following conditions: the last three consecutive years of profit, and the cumulative net profit in the last three years shall not be less than 200 million yuan, the net profit in the most recent year shall not be less than 100 million yuan, and the cumulative net cash flow generated by operating activities in the last three years shall not be less than 200 million yuan or the cumulative operating income shall not be less than 1.5 billion yuan.
If the operating entity corresponding to the reorganization and listing target assets of a listed company on the Main Board has a voting rights difference arrangement, in addition to complying with the corresponding issuance conditions and the positioning of the relevant sectors stipulated in the Registration Administrative Measures, its voting rights arrangements shall comply with the provisions of the Shanghai Stock Exchange Stock Listing Rules and other rules, and meet the following conditions: the last three consecutive years of profit, and the cumulative net profit of the last three years shall not be less than 200 million yuan, the net profit of the most recent year shall not be less than 100 million yuan, and the operating income of the most recent year shall not be less than 1.5 billion yuan.
In addition, the new regulations have improved the mechanism for the rapid review of small amounts of restructuring. Expand the scope of application of the small-amount fast-track mechanism on the STAR Market, remove the restriction that "it shall not be used to pay transaction consideration" for supporting financing on the STAR Market, and change the supporting financing of the STAR Market from "no more than 50 million yuan" to "no more than 10% of the audited net assets of the listed company in the most recent year" in accordance with the idea of matching the financing demand with the scale of the company.
It is clarified that where "there are major and complex circumstances such as major unprecedented, major public opinion, etc., in the transaction plan", the small-amount rapid review procedure is not applicable. In addition, the review time limit for exchanges under the Small Claims Rapid Mechanism will be shortened to 20 working days.
At the same time, the new regulations support mergers and acquisitions between listed companies. If the relevant entity that acquires shares through the merger does not meet the requirements for the management of investor suitability, it may continue to hold or sell the corresponding shares in accordance with regulations.
In addition, the Shanghai Stock Exchange revised the Administrative Measures for the Listing Review Committee and the M&A and Restructuring Review Committee, aiming to further promote the "sunshine use of power and transparent approval", strictly manage and supervise the members, and better play the role of the Listing Committee and the Restructuring Committee as gatekeepers and checks and balances.
[The listing threshold of the Shenzhen Stock Exchange has been raised]
The first is to revise the listing conditions on the main board to enhance the ability to stabilize returns. The newly revised Stock Listing Rules moderately increase the net profit, cash flow and income indicators of the first and second sets of listing standards on the main board, mainly to increase the cumulative net profit of the first set of listing standards in the last three years from 150 million yuan to 200 million yuan, the net profit index in the latest year from 60 million yuan to 100 million yuan, the cumulative net cash flow index from operating activities in the last three years from 100 million yuan to 200 million yuan, and the cumulative operating income index in the last three years from 1 billion yuan to 1.5 billion yuan; Raise the cash flow target of the second set of listing standards from $150 million to $250 million, further highlighting the blue-chip positioning of the main board and enhancing the ability of listed companies to return investors stably; Moderately increase the estimated market capitalization, revenue and other indicators of the third set of listing standards on the main board, increase the estimated market value of the third set of indicators from 8 billion yuan to 10 billion yuan, and increase the operating income from 800 million yuan to 1 billion yuan in the latest year, strengthen the representativeness of the industry, and provide the market with more high-quality and diversified investment targets.
the second is to revise the requirements for listing on the GEM to highlight the company's ability to resist risks; Moderately increase the estimated market capitalization, revenue and other indicators of the second set of listing standards on the GEM, increase the estimated market value from 1 billion yuan to 1.5 billion yuan, and increase the operating income from 100 million yuan to 400 million yuan in the latest year, so as to support the listing of enterprises whose scale, industry and development stage meet the positioning requirements of the GEM.
The third is to improve the positioning of the sector and clarify market expectations.
This time, it also revised the conditions for the implementation of restructuring and listing of listed companies on the main board and GEM in the "Rules for the Review of Major Asset Restructuring of Listed Companies", further strengthened the supervision of restructuring and listing, and reduced the value of "shell resources".
[The cash dividend of the listed company does not meet the standard, and the ST will be implemented]
The Shenzhen Stock Exchange has made the following optimization arrangements for the provisions on dividends in the Stock Listing Rules and the ChiNext Stock Listing Rules.
The first is to take strong restraint measures against substandard dividends. Companies that have not paid dividends for many years or have a low dividend ratio will be included in the "implementation of other risk warnings" (ST) situations.
Among them, in terms of the main board of the Shenzhen Stock Exchange, if the net profit of the most recent fiscal year is positive and the undistributed profits in the consolidated statement and the parent company's statement are positive, the total cumulative cash dividend in the last three fiscal years is less than 30% of the average annual net profit, and the cumulative dividend amount is less than 50 million yuan, will be implemented.
In terms of GEM, taking into account the characteristics of different sectors and the differences between companies, the absolute value of the dividend amount was lowered to 30 million yuan. At the same time, GEM companies with cumulative R&D investment accounting for more than 15% of cumulative operating income in the last three years or a cumulative R&D investment of more than 300 million yuan in the last three years can be exempted from ST. The amount of repurchase cancellation is included in the calculation of cash dividends.
The second is to promote listed companies to pay dividends multiple times a year.
[Delisting intensity is upgraded again: serious capital occupation is included in the normative delisting]
The Shenzhen Stock Exchange has revised and improved the Stock Listing Rules and the GEM Stock Listing Rules to promote a more accurate realization of "all withdrawals that should be withdrawn".
The first is to highlight the clear orientation of strict supervision.
First, expand the scope of application of mandatory delisting for major violations, reduce the number of years, amount and proportion of delisting due to financial fraud, and increase the number of years of continuous fraud and delisting. Distinguish three levels: one year, two consecutive years, three consecutive years and above: one year is a false record of the amount of "200 million yuan, accounting for 30%"; the two years are "a total of 300 million yuan, accounting for 20%"; If it is found to be a false record for three years or more, it will be delisted, and we will resolutely crack down on malignant and long-term systemic financial fraud. The one-year and two-year standards apply to false records in 2024 and subsequent years; The three-year or more standard applies to false entries in 2020 and subsequent years.
Second, in the case of financial fraud, ST is newly added, and if the prior notice of administrative penalty shows that there are false records in the company's financial and accounting reports, but it does not touch the criteria for major illegal delisting, ST will be implemented. Only when the company completes the retrospective adjustment of the penalty items and the administrative penalty decision has been made for 12 months can it apply for removal of the hat.
Third, if the balance of funds occupied by the controlling shareholder or its affiliates reaches more than 200 million yuan, or accounts for more than 30% of the company's latest audited net assets, and is not returned within the required time limit, the company's shares will be delisted, effectively enhancing the deterrence of major shareholders in the supervision of encroachment.
The second is to highlight the investment value orientation of listed companies.
First, we will strictly enforce the financial delisting indicators, raise the requirements for the operating income indicators of loss-making companies on the main board, from the current "100 million yuan" to "300 million yuan", maintain the "100 million yuan" unchanged on the GEM, increase the total profit in the dimension of loss inspection, introduce the delisting of financial *ST companies with internal control opinions on financial reporting, and increase efforts to eliminate companies that lack the ability to continue operations.
Second, the internal control audit opinion will be included in the normative delisting situation, the implementation of normative delisting for many years of internal control non-standard opinions, the implementation of *ST for two consecutive years of internal control non-standard or failure to disclose the internal control audit report in accordance with the regulations, and the delisting of the third year of non-standard internal control or failure to disclose the internal control audit report in accordance with the regulations, urging the company to improve the level of standardized operation.
Third, guide the company to improve its internal governance, add major defects in disorderly competition for control and delisting, urge shareholders to resolve control disputes within the framework of the system, and effectively protect the right to know of small and medium-sized investors.
Fourth, improve the threshold for delisting on the main board, appropriately raise the market value delisting standard for A-share (including A+B shares) on the main board to 500 million yuan, increase market-oriented clearance, and promote listed companies to improve their quality and investment value.
(Wind synthesizes information from the websites of China Business Network, Securities Times, China Securities Journal and the Securities Regulatory Commission and Exchange)
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