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Business / Policy Watch

Regulator issues rules for listed companies

By Cai Xiao (China Daily) Updated: 2014-01-04 07:40

China's top securities regulator on Friday released additional guidelines for A-share listed companies, in a bid to crack down on irregular activities.

The guidelines issued by the China Securities Regulatory Commission set some standards for the commitments that companies make to investors.

If a company does not fulfill those commitments, it will be punished, the CSRC said.

Listed companies will also have to release detailed information regarding its commitments to investors, performance indicators, timelines and risks, it added.

"The commission will ... strictly follow the guidelines to enforce restrictions and punish companies that break their commitments," said Zhang Xiaojun, a CSRC spokesman.

At the end of 2012, the commission conducted a review of the commitments to investors of listed companies. Of the 2,493 listed companies at the Shanghai and Shenzhen stock exchanges, 1,631 had not fulfilled their commitments before the announced deadlines, while 80 companies did not fulfill them even after the deadlines.

The spokesman said the reasons for the result included the adverse credit environment and the fact that the punishment for companies that failed to keep their pledges were not strong enough.

Wang Yi, a manager at China Securities Co Ltd, told China Daily that the CSRC's move is positive because investors were not protected against companies that did not fulfill their commitments.

Wang added that if companies are not able to keep their promises because of force majeure, the regulator should think twice before punishing them. Institutional and strategic investors pay more attention to the commitments of listed companies, while retail investors focus more on share prices, Wang said.

Some investors also welcomed the CSRC's initiative.

Wang Cheng, a Zhejiang-based retail investor, said that Eging Photovoltaic Technology Co Ltd, a company listed company on the Shanghai Stock Exchange, made a commitment two years ago regarding its profit but did not fulfill it, which caused him to suffer losses.

The CSRC and the Ministry of Finance also released rules on Friday for listed companies' internal information disclosure procedures.

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