Following the public solicitation of opinions on April 12, on the evening of April 30, the Shanghai and Shenzhen Stock Exchanges officially issued 9 supporting business rules including the "Rules for the Review of Stock Issuance and Listing", and the "1+N" policy system of the capital market was further implemented. Among them, the new regulations clarify that the criteria for mandatory delisting will be further tightened, and unqualified listed companies will be resolutely cleared.
Strict mandatory delisting criteria to reduce the value of "shell" resources
The revision of the delisting rules resolutely implements the requirements of the new "National Nine Articles" on strengthening the supervision of delisting.
From April 12 to April 19, the Shanghai and Shenzhen Stock Exchanges solicited opinions from the market on the relevant business rules through official websites, emails, symposiums and other channels and methods, and fully demonstrated the matters involved in the feedback. The Shanghai and Shenzhen Stock Exchanges said that they will earnestly assume the main responsibility for the implementation of delisting, conscientiously perform important responsibilities such as delisting decision-making, information disclosure supervision, and transaction monitoring, increase delisting supervision, and promote the formation of a normalized delisting pattern that should be withdrawn and cleared in a timely manner.
The existing mandatory delisting indicators are mainly aimed at "shell companies" and "black sheep", but this reform scientifically sets the scope of application for major illegal delisting, strictly identifies companies with no investment value, strictly cracks down on companies that have been fraudulent for many years and have the funds occupied by controlling shareholders and do not rectify, highlight the quality and investment value of listed companies, and do not target "small-cap" companies. Increase the elimination of companies with poor performance. The existing portfolio index is a loss and an operating income of less than 100 million yuan, and this reform strengthens the assessment of the ability to continue operations, aiming to clear out the poor performance of the company. Specifically, it includes the adjustment of the main board operating income from 100 million yuan to 300 million yuan, and the negative increase in total profit in the loss.
The reform also further improves the market capitalization standard and other trading delisting indicators, and continues to adhere to the differentiated standard setting of different sectors. Previously, after the delisting reform in 2020 set a market value of 300 million yuan for delisting, no company has touched it, and this time it is planned to appropriately increase the main board A shares (including A + B shares) to 500 million yuan, aiming to increase the clearance of market-oriented companies.
In addition, in this reform, the occupation of funds, internal control audit opinions, and long-term disorderly struggle for control will also be included in the normative delisting situation, so as to strengthen the strong constraints on standardized operation:
The first is the delisting of the new controlling shareholder's funds. If the controlling shareholder of a listed company (or the largest shareholder without a controlling shareholder) and its affiliates occupy funds for non-operational purposes, with a balance of more than 200 million yuan or more than 30% of the net assets, and fail to return them within the time limit ordered by the CSRC to make corrections, they will be subject to a standardized delisting procedure to deter illegal occupation and urge the occupier to repay the appropriation in a timely manner.
The second is to add the delisting of non-standard audit opinions on internal control. If the internal control audit report is unable to express an opinion or negative opinion, or the internal control audit report is not disclosed in accordance with the regulations, it will be delisted in the first year of ST, the second year of *ST, and the third year. This indicator sets up a progressive implementation procedure, which is conducive to further giving play to the role of internal control audit opinions and urging the company to standardize its operation.
The third is the disorderly competition for control and delisting. If the control of the listed company is in a disorderly manner, resulting in investors being unable to obtain the effective information of the listed company, *ST and delisting shall be implemented in order. The disorderly struggle for control is a typical corporate governance chaos, and it is difficult for investors to judge the effectiveness of information disclosure.
For major illegal delisting, a multi-level and three-dimensional delisting situation has been formed, and this amendment will tighten the two-year fraud situation on the basis of the initial listing and reorganization listing fraudulent issuance, fraud to circumvent financial delisting and five security situations, and add a new one-year serious fraud and a three-year continuous fraud, so as to further intensify the crackdown on serious financial fraud. In addition, for the failure of internal control, companies with the funds of controlling shareholders will also be strictly delisted. In particular, if it is occupied multiple times and is not rectified, or it is occupied again after rectification, it will be cleared.
Smooth transition between the old and new regulations and standards is not retroactive
Taking into full account the objective needs of a smooth transition of the market, the retrospective application arrangement of the delisting reform generally follows the principle of "non-retroactivity", and a certain period of improvement is given for financial, standardized, market value and other indicators:
The first is on financial delisting indicators. The revised "loss + operating income" combination indicators of the main board financial category will be applied from the 2024 annual report, and the number of companies that will be delisted by the applicable portfolio financial indicators next year is expected to be about 30, and about 100 companies may touch this indicator and implement delisting risk warning next year, and these companies still have more than a year and a half to improve their operations and improve quality, and they will still not meet the standards by the end of 2025 before they will be delisted.
The second is about the trading delisting indicators. In addition to the companies that have been locked in for delisting, only three main board companies in Shanghai and Shenzhen currently have a market value of less than 500 million yuan, all of which are risk warning companies, and some companies have intertwined risks and face other types of delisting risks.
The third is the new situation of normative delisting. The delisting of the revised capital occupation and control dispute will come into force on the date of promulgation of the new rules. Before the promulgation and implementation of the new rules, the controlling shareholder or actual controller of the non-operating occupation of funds has changed, and the current actual controller has no relationship with the capital occupier, the original capital occupation behavior is not subject to the new rules to regulate the delisting. If there is a change in the actual controller after the implementation of the new rules, the new rules will apply to regulate delisting. In the case of delisting of internal control non-standard opinions, 2024 is the first fiscal year, that is to say, if the company is issued with an internal control non-standard opinion due to the 2024 annual report, and is ST implemented by the exchange and there is no improvement in the following two years, it will be forced to delist after the issuance of the 2026 annual report at the earliest.
Fourth, it is about the delisting indicators of major violations. In general, in accordance with the principle of non-retroactivity and stabilizing investors' expectations, the listed company receives the prior notice of administrative penalty as the time point for the new and the old. Where a prior notice of administrative penalty is received after the promulgation and implementation of the new rules, the provisions of the new rules on mandatory delisting for major violations shall apply. Where prior notice of administrative punishment is received before the new rules are promulgated and implemented, the original rules are to be applied and are no longer to be applied retroactively.
Fifth, it is necessary to crack down on financial fraud and the appropriation of funds. The New Regulations provide limited retroactive application to situations such as delisting for financial fraud for three consecutive years or more, unresolved capital occupation and no change of control, and receipt of an administrative penalty decision for financial fraud after the New Regulations to implement ST, with the aim of increasing the punishment for violations of laws and regulations. For example, the new regulations stipulate that the situation of major illegal delisting for three consecutive years or more will be applicable from 2020, mainly considering that the nature of the fraud for many years is particularly serious, the market impact is bad, and it seriously undermines the foundation of market integrity and seriously infringes on the legitimate rights and interests of investors. Under the high-pressure situation of "zero tolerance" in the new "Securities Law" in 2020 to strictly crack down on financial fraud, and the "Implementation Plan for Improving the Delisting Mechanism of Listed Companies" deliberated and approved by the Central Deep Reform Commission, it is clear that the "black sheep" who violate major laws and regulations must be severely punished in accordance with the law.
Editor-in-charge: Zhang Xiaonan
Inspect Jiang Saisai
Source: Shanghai Stock Exchange, Shenzhen Stock Exchange, Xinhua News Agency