May 15 is the annual National Investor Protection Awareness Day. Different from previous years, the "515" in 2024 coincides with the introduction of the new "National Nine Articles" just over a month, during which a number of supporting business rules such as the "Stock Issuance and Listing Review Rules" issued by the Shanghai and Shenzhen Stock Exchanges have also been implemented simultaneously, and the investor protection system and mechanism are being improved.
Over the past month or so, a series of positive changes have been showing a series of positive changes worthy of investors' attention in many important areas such as issuance and listing review, major shareholder reduction, dividends and delisting, which are of general concern to investors.
New rules for delisting "exert force"
On May 10, nearly 10 companies including ST Modern (002656.SZ), ST Red Sun (000525.SZ), and ST Huatie (000976.SZ) disclosed that they had received relevant announcements from the China Securities Regulatory Bureau ordering corrective measures, and most of these companies were fined for the occupation of funds by shareholders. However, unlike similar penalty disclosures in the past, the words "risk warning announcement" are added to the title of the announcement of these companies.
This is the result of the new "National Nine Articles" supporting rules and new rules for delisting. The new regulations add three new types of regulatory delisting, including the non-operational occupation of funds by controlling shareholders and their related parties; The other two are the three-year internal control over financial reporting that is negatively issued or unable to express an opinion, and the disorderly struggle for control.
Therefore, while receiving the penalty from the CSRC, the above-mentioned company reminded the relevant delisting risks: if the company fails to clear the occupied funds within six months in accordance with the requirements of the correction, the Shenzhen Stock Exchange will suspend the company's shares, and if the rectification is not completed within two months after the suspension, the Shenzhen Stock Exchange will implement a delisting risk warning for the company's stock trading, and if the rectification is not completed within two months, the Shenzhen Stock Exchange will decide to terminate the listing and trading of the company's shares.
According to the research report of Huajin Securities, the new delisting regulations not only increase the standard delisting, but also broaden the scope of mandatory delisting for major violations: first, increase the number of fraudulent behaviors that last for 3 years or more; the second is to lower the delisting criteria for the amount and proportion of fraud; At the same time, the lower limit of the financial delisting index will be raised: the lower limit of the operating income index of the main board company will be raised from 100 million yuan to 300 million yuan; Raise the market value delisting target: Raise the market value delisting target for A-share listed companies (including A+B shares) on the main board from less than 300 million yuan to less than 500 million yuan.
Among them, where the falsification continues for 3 years or more, the false record in 2020 and subsequent years shall apply; In the case of financial delisting risk warning, 2024 is the first applicable fiscal year, and the specific impact still needs to be paid attention to.
"From the perspective of protecting investors, the new 'National Nine Articles' and supporting documents have produced a strong chemical reaction in the market. From the perspective of the stock market, ST shares and stocks with poor performance are abandoned by the market, and investors should pay close attention to the changes brought by the policy to the market. Nowadays, many listed companies are facing huge risks due to violations such as the occupation of funds by related parties and guarantees for major shareholders, and they are even directly delisted by ST, which was not done before, and investors must keep their eyes open and understand the dynamic changes in the market. Focusing on the new "National Nine Articles" and the changes it brings, Hong Peng, senior partner of Zhejiang Zhiren Law Firm and chief lawyer of the capital department, analyzed to Silver Persimmon Finance.
The number of IPO terminations has increased, and the supervision of "gatekeepers" has become stricter
While speeding up the formation of a normalized delisting pattern that should be withdrawn and cleared in a timely manner, strict access to issuance and listing is also the focus of the new "National Nine Articles". The new regulations have raised the IPO standards to varying degrees.
In addition, on April 30, the China Securities Regulatory Commission (CSRC) issued a decision on amending the "List of Random Sampling Items of the China Securities Regulatory Commission", which includes revising the random inspection ratio of the first item of the random inspection items listed in the annex, "inspection of initial public enterprises", from "the proportion of random lottery is 5%" to "the proportion of random lottery is 20%".
The increase in the entry threshold is reflected in the IPO queue, which saw a significant increase in the number of terminated companies in the queue in April. According to incomplete statistics from the official website of the Shanghai and Shenzhen North Stock Exchanges, the number of terminated companies in April totaled 46, significantly more than 33 and 21 in March and February, and most of the terminations were caused by withdrawal.
As the "gatekeepers" of the market, intermediaries are also being regulated more tightly. In April, a number of brokerages announced the news that they were under investigation. For example, on April 12, CITIC Securities and Haitong Securities announced that they were filed by the China Securities Regulatory Commission for suspected violations of laws and regulations in the process of transferring CNNC titanium dioxide's non-public issuance of shares in 2023 in violation of restrictive regulations; On April 19, the penalty results were implemented, and the China Securities Regulatory Commission planned to fine and confiscate a total of 235 million yuan to all participants. On April 16, Soochow Securities received the "Notice of Case Filing" from the China Securities Regulatory Commission, and was filed by the China Securities Regulatory Commission on suspicion that Gome Communications and Zixin Pharmaceutical failed to be diligent and conscientious in sponsoring the non-public issuance of shares. Huaxi Securities announced on April 12 that it was suspended for six months from the sponsorship business of Jin Tongling, which involved the sponsorship project of Jin Tongling's non-public issuance of shares in 2019.
In addition, in the same month, Huatai Securities was ordered to correct regulatory measures by the Jiangsu Securities Regulatory Bureau, the Shenzhen Securities Regulatory Bureau decided to issue a warning letter to Guosen Securities, and the Beijing Securities Regulatory Bureau decided to issue a warning letter to Galaxy Securities.
Accounting firms are also facing strong regulation. On May 13, the Jiangsu Supervision Bureau of the China Securities Regulatory Commission disclosed an administrative penalty decision, Dahua Certified Public Accountants (Special General Partnership) was ordered to correct by the Jiangsu Securities Regulatory Bureau for failing to be diligent and conscientious in the audit of Jin Tongling's annual financial statements from 2017 to 2022, and the audit report issued by it contained false records, fined and confiscated business income of 6.8868 million yuan, imposed a fine of 34.434 million yuan, and suspended from engaging in securities service business for 6 months. A number of A-share listed companies subsequently announced that they would cancel the appointment of Dahua as the company's auditor for 2024.
The new rules also pay attention to the "iron rooster" that A-shares have been criticized by investors. According to the research report, the new regulations take strong restrictive measures for non-compliance with dividends, including the "implementation of other risk warnings" (ST); Taking the main board as an example, ST is implemented for companies that meet the basic conditions for dividends, the cumulative total cash dividends in the last three fiscal years are less than 30% of the average annual net profit, and the cumulative dividend amount is less than 50 million yuan.
Although the dividend rules will be officially implemented from January 1, 2025, A-share companies have reacted. According to Flush iFinD data, there are 3,477 A-share companies with cash dividend plans in 2023, an increase of 17% from 2,966 in the same period in 2022, a significant increase.
It is not difficult to see that the new regulations are actively responding to investors' previous concerns, and the results after their implementation are emerging. In the view of legal practitioners who have been active in securities legal affairs and investor protection for a long time, the changing trend of the market may continue.
Mao Wei, senior partner and director of the capital market department of Beijing Jingshi Law Firm, pointed out to Silver Persimmon Finance: "From the perspective of investor protection, combined with the implementation of the new company law, it will be more convenient to protect the legitimate rights and interests of shareholders in the future. The whole market will undergo great changes, the number of newly listed companies will decrease, and the companies that have already been listed will strengthen their internal strength and do a good job in operation. ”
Kong Cong, director of Zhejiang Fangguang Law Firm, believes that the new "National Nine Articles" mention "promoting the introduction of judicial interpretations on the crime of breach of trust and harming the interests of listed companies, judicial interpretations on civil compensation such as insider trading and market manipulation", "improving the investor compensation and relief mechanism in the process of delisting, and the controlling shareholders, actual controllers, directors and executives who are responsible for major illegal delisting must compensate investors for losses in accordance with the law", and I believe that the follow-up will have a more direct positive impact on investors' rights protection.