A-shares exploded "seven thunders" overnight! 500,000 shareholders were caught off guard, and 7 companies' annual reports were filed for "difficult birth".

China Times

2024-05-09 19:28Published on the official account of Beijing China Times

A-shares exploded "seven thunders" overnight. Seven listed companies announced on the evening of May 8 that they had received a notice from the China Securities Regulatory Commission (CSRC) that they had failed to disclose their 2023 annual reports on time.

Liu Chunsheng, an associate professor at the Central University of Finance and Economics, said in an interview with the China Times that the recent investigation of a number of listed companies for failing to disclose their annual reports in a timely manner reflects the "zero tolerance" attitude of the regulatory authorities towards information disclosure violations, as well as the determination and action to strengthen the compliance supervision of the capital market.

Failure to disclose the annual report on time was filed

Specifically, there are various reasons for the "difficult birth" of the annual reports of 7 listed companies. For example, Puli Pharmaceutical has not yet completed the self-examination, and the company's previous financial reports may have errors to be corrected; Weichuang shares were trapped in the annual report and failed to obtain the audit; ST Huatie was unable to disclose its annual report on time because the independent directors voted against it on the audit committee due to financial data issues; *ST Yuebo is in an even more difficult situation, because it did not pay the audit fee, which led to the resignation of the annual audit agency.

Zhan Junhao, founder of Fujian Great Aim Brand Positioning Consulting, told the China Times that the failure of listed companies to disclose their annual reports on time is often closely related to the defects in the corporate governance structure, the formality of the internal risk control system, and the lack of diligence and diligence of senior managers.

In terms of impact, lawyer Lu Dingliang, a partner of Beijing Jingshi Law Firm, told the China Times that the overdue disclosure of annual reports will have a series of negative impacts. According to the Listing Rules, if a listed company fails to disclose its annual report within the statutory deadline, its shares will be suspended from trading and may even be delisted.

Lo further pointed out that failure to disclose annual reports on time can also damage a company's public image and market credibility, and investors may question the company's management, financial transparency, and whether there are potential financial problems. In addition, shareholders and investors may also file lawsuits for losses caused by failure to disclose annual reports in a timely manner, increasing the company's legal risks and financial burden.

Where do the 500,000 shareholders go?

It is worth noting that the shares of these companies whose annual reports are not disclosed on time have been suspended since May 6, and two of them, *ST Sansheng and *ST Yuebo, have been "locked" and forced to delist, while the remaining companies will be subject to delisting risk warnings if they are still unable to disclose their 2023 annual reports within two months of the suspension.

Wind data shows that as of the end of the third quarter of 2023, Dongxu Optoelectronics, Dongxu Blue Sky, Weichuang Co., Ltd., Puli Pharmaceutical, ST Huatie, *ST Yuebo, and *ST Sansheng have 7 companies, with 288,000, 81,000, 41,000, 30,000, 39,000, 9,000 and 8,000 shareholders respectively, with a total of about 496,000 shareholders.

"Failure to disclose the annual report in a timely manner and being filed for suspected violations of information disclosure may be a serious blow to shareholders." In an interview with the China Times, financial commentator Zhang Xuefeng said that shareholders need to fully understand the company's financial status and business operations when investing, and failure to disclose the annual report in a timely manner may lead to information asymmetry, making it impossible for investors to accurately assess the company's value and risks. In this case, investors may face investment losses as they do not have access to the necessary information in a timely manner to make the right investment decisions.

"The annual report is an important document for a listed company to present its financial status and operating results to investors and the public." Zhan Junhao said that failure to disclose the annual report in a timely manner will prevent investors from knowing the true situation of the company, thereby increasing the uncertainty and risk in the market.

Zhan Junhao also pointed out that for shareholders, they should remain calm and rational in the face of the failure of listed companies to disclose their annual reports in a timely manner. First of all, pay attention to the company's announcements and regulatory dynamics to understand the company's latest situation. Secondly, it is necessary to reasonably evaluate the company's investment value and risk according to its own investment objectives and risk tolerance. If the company faces the risk of delisting, shareholders should take timely measures to protect their investment rights and interests. In terms of rights protection, shareholders can file complaints and claim compensation from listed companies and regulatory authorities through legal channels.

Strict supervision signals continue to be released

In the A-share market, the accuracy of information disclosure is the key to maintaining the health of the capital market and protecting the interests of investors.

Zhang Xuefeng said that shareholders should remain vigilant, pay attention to the company's information disclosure in a timely manner, and take active action to protect their rights and interests if they find that the company has violated the rules. At the same time, the regulatory authorities should also strengthen the supervision and management of information disclosure by listed companies to ensure the fairness, impartiality and transparency of the market.

Lu Dingliang said that a number of listed companies were investigated by the China Securities Regulatory Commission for failing to disclose their annual reports in a timely manner, releasing a clear signal to strengthen market supervision. This can not only prompt all listed companies to realize the seriousness of complying with information disclosure regulations, enhance their compliance awareness of internal management and financial reporting, and ensure the accuracy and timeliness of information, but also demonstrate the determination of the regulator to crack down on violations of laws and regulations.

In Lu Dingliang's view, it is an indispensable part of the process of standardization and rule of law in the capital market to take investigation measures against listed companies that fail to disclose their annual reports on time, and it is of great significance to maintain market order, protect the interests of investors, and promote the high-quality development of listed companies.

Editor-in-charge: Ma Xiaochao Editor-in-chief: Xia Shencha

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