Original title: Eight companies have been delisted this year, and the A-share delisting mechanism has been continuously improved
Reporter Li Jing reports from Beijing
As the disclosure of annual reports is coming to an end, another batch of listed companies are about to bid farewell to the A-share market. As of press time, eight companies have been delisted this year. In recent years, as the reform of the mainland capital market has entered the fast lane, the delisting mechanism has been continuously improved, and the delisting rate of the A-share market has increased significantly. The "Opinions on the Strict Implementation of the Delisting System" recently issued by the China Securities Regulatory Commission further released a "zero tolerance" signal.
Since 2021, the delisting rate has increased significantly
Following the retreat of Xinhai, another listed company bid farewell to A-shares. On April 25, Poten Environment Group Co., Ltd. (hereinafter referred to as "Delisted Poten") was terminated and delisted by the Shanghai Stock Exchange. Since 2024, eight companies have been delisted from the A-share market.
According to the company's announcement, the delisted Potian previously received the "Administrative Penalty Decision" issued by the Beijing Securities Regulatory Bureau, determining that it had falsely increased or reduced its operating income and profits through various means, resulting in false records in the annual reports from 2017 to 2021, which had touched the material illegal forced delisting stipulated in the listing rules of the Shanghai Stock Exchange. In accordance with the relevant provisions of the stock listing rules, the Shanghai Stock Exchange decided to terminate the listing of the delisted Poten shares. On the evening of April 18, the delisting of Poten announced that the delisting period of the company's shares had ended on the same day, and it would be terminated and delisted by the Shanghai Stock Exchange on April 25.
There are also a number of companies that have locked in the face value of the forced delisting of transactions in advance because the closing price has been lower than 1 yuan for many consecutive days.
On April 25, *ST Civil Control was suspended. On the evening of the 24th, *ST Civil Control issued a risk warning announcement on the termination of the listing and suspension of the company's shares, saying that as of April 24, 2024, the closing price of the company's shares has been lower than 1 yuan for 20 consecutive trading days, which has touched the mandatory delisting of the trading category stipulated in the stock listing rules of the Shenzhen Stock Exchange, and the company's shares will be terminated from listing and trading by the Shenzhen Stock Exchange. In addition, there are many companies such as *ST Meisheng and *ST New Textile that have recently issued announcements that the company has closed below 1 yuan for more than ten consecutive trading days, and locked the face value in advance and delisted.
In addition, a number of companies such as *ST Jinglan and *ST Weihai have also issued risk reminder announcements on the possible termination of the listing of the company's shares, saying that the company may hit the financial delisting index, and the company's shares are facing the risk of being terminated. From the perspective of delisting risk warning, more than 40 listed companies have been subject to delisting risk alert (*ST) since 2023, and if it is touched again, these companies will also be terminated from listing.
Since the issuance of the new delisting rules in 2020, the delisting rate of the A-share market has increased significantly. Wind data shows that since 2021, the number of companies delisted in the A-share market has reached 119, more than double the total number of companies delisted in the A-share market in the previous 10 years. According to the research report of Huatai Securities, with December 31, 2020, the date of the release of the new regulations, the annualized delisting rate was 0.4% in the first three years of the new regulations, and the annualized delisting rate was 0.8% since the new regulations, and the delisting rate has doubled.
"The significant increase in the delisting rate sends a signal to the market that the exchange will strictly implement the delisting system and strengthen the management of listed companies. Guojin Securities believes.
The delisting mechanism has been continuously improved
"At present, the delisting status of the A-share market is characterized by standardization, diversification and normalization. Tian Lihui, dean of the Financial Development Research Institute of Nankai University, said that thanks to the continuous optimization and refinement of market rules, the stricter implementation of regulatory policies and the improvement of market self-purification ability, the number of delistings in the A-share market has reached a record high, the market metabolism has accelerated, and the overall quality of the market has been improved.
In particular, in terms of market mechanism, in recent years, as the supply-side reform of the mainland capital market has entered the fast lane, the reform of the delisting system of the A-share market has continued to deepen, and the delisting mechanism has been continuously improved.
On April 12, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market" (referred to as the new "National Nine Articles"), proposing to increase the supervision of delisting. 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. It proposes a number of requirements, such as further tightening the mandatory delisting standards, further smoothing multiple delisting channels, further reducing the value of "shell" resources, and further strengthening delisting supervision.
On the same day, the China Securities Regulatory Commission (CSRC) formulated the Opinions on the Strict Implementation of the Delisting System (the "Opinions") on the basis of conscientiously summarizing the reform experience and fully considering the national and market conditions, and the Shanghai and Shenzhen North Stock Exchanges revised and improved the relevant delisting rules (the "New Delisting Regulations"). Through strict delisting standards, we will intensify efforts to clear out "zombie shells" and "black sheep" and reduce the value of "shell" resources; at the same time, we will broaden diversified exit channels and strengthen investor protection for delisted companies.
The reporter noted that the revision of the delisting criteria further released a clear signal of "zero tolerance" on the basis of the delisting reform in 2020, highlighting the deterrence of financial fraud and corporate governance chaos. Among them, on the basis of the mandatory delisting of a certain proportion of continuous fraud in the previous two years, new cases of one-year fraud, three or more years of continuous fraud, and new delisting criteria such as the occupation of funds and the issuance of inability to express an opinion or negative opinion on internal control. The revision of the delisting criteria also tightens the financial delisting indicators, intensifies the delisting of companies with poor performance, and appropriately raises the market value delisting criteria from less than 300 million yuan to less than 500 million yuan, so as to promote the full play of the market-oriented delisting function.
The Opinions also emphasize that the entity responsible for the major illegal delisting must compensate investors for their losses in accordance with the law, and only in this way can the violators pay the due price. The China Securities Regulatory Commission said that in the next step, the China Securities Regulatory Commission will make greater efforts to implement investor compensation relief, give full play to the role of securities investor protection institutions, and comprehensively use various methods such as representative litigation, advance compensation, and professional mediation to protect the legitimate rights and interests of investors.
The survival of the fittest effect is becoming increasingly prominent
"The new rules on delisting are good for the healthy operation of the A-share market in the long run. Yang Chao, a strategic analyst at China Galaxy Securities, said that "strong supervision, risk prevention, and high-quality development" is an organic unity. Strong supervision and risk prevention are the prerequisites for promoting high-quality development, and only under these two conditions can the capital market achieve high-quality development. From the new "National Nine Measures" to the new rules on delisting, the emphasis is on high-quality development. From a long-term perspective, it is imperative for good money to drive out bad money, and the basic trend of China's long-term economic improvement will not change.
Huatai Securities believes that the formulation of new delisting regulations means that the reform of the A-share delisting system may enter a new stage, and the market ecology of survival of the fittest is expected to accelerate. On the basis of the new delisting rules in 2020, the new delisting rules further highlight the deterrence of financial fraud and corporate governance chaos, and the mandatory delisting standards are stricter and more wide-ranging; Overall, with the implementation of the new delisting rules, the proportion of A-shares forced to delist due to financial fraud/financial indicators may increase significantly, and the market is expected to accelerate its liquidation.
"The new delisting rules will help build a more standardized, transparent and efficient capital market environment and promote the healthy development of the A-share market. Tian Lihui analyzed that the new rules on delisting have a huge impact on the A-share market. Under the new delisting rules, the standards for financial fraud will be refined, the value of shell resources will be diluted, the delisting of the face value market value will be strengthened, the elimination of inferior companies will be accelerated, the compensation relief for investors is expected to be enhanced, the market resources will be optimally allocated, the market will be healthier and more stable, and the interests of investors will be better protected.
According to the analysis of Huatai Securities, the A-share delisting ecology is expected to make efforts from four aspects: first, improve the multi-dimensional standard system, simplify the delisting process, and improve the efficiency of delisting, such as regular comprehensive evaluation of listed companies, coordination of financial/transactional/administrative standards, and strengthening corporate governance, and differentiation and streamlining of delisting procedures; The third is to respect the initiative to delist and encourage listed entities to become better and stronger through mergers and acquisitions; fourth, improve the supporting guarantee system, take the developed markets as a reference, improve the supporting system in terms of laws and regulations, regulatory systems, and the establishment of compensation institutions, optimize the mainland's securities class action system, establish an incentive mechanism for insurance institutions, and effectively safeguard the legitimate rights and interests of small and medium-sized investors.
Source: Economic Information Daily