On June 13, 2014, CSRC Chairman Xiao Gang presided over a workshop of experts and scholars on the delisting regime reform to take in comments and suggestions on reforming, improving and strictly implementing the delisting regime for listed companies. Wang Baogang from the Chinese Academy of Social Sciences, Peng Bing from Peking University, Tang Xin from Tsinghua University, Ye Lin from Renmin University, Liu Jipeng, Wang Guangjin, and Zhao Xudong from China University of Political Sciences and Law, Han Fulin from Central University of Finance and Economics, Wu Hong and Chen Daisong from East China University of Political Science and Law, Feng Guo from Wuhan University, Dong Dengxin from Wuhan University of Science and Technology, independent financial analysts Hou Ning and Pi Haizhou, and Huang Sheng from Shenzhen Shenshang Holding Group Co., Ltd. attended the workshop in person or through video conferencing.
The panel of experts and scholars expressed their support for the CSRC’s continuous efforts in reforming and improving the delisting regime for listed companies. They believed that since delisting regime is an important cornerstone of the capital markets, its thorough implementation will help reduce the market’s operating costs, invigorate market participants, protect the lawful interests of small and medium investors, foster a rational investment culture, and will be essential to promoting a Darwinian sifting of market participants for the healthy growth of the capital market and optimizing the allocation of resources. In addition, a consensus amid the discussions was that a sound and effective delisting regime cannot operate without a healthy and rational market culture, a well-developed investor protection program, judicial safeguards and other supporting institutional arrangements; and that the CSRC needs to gradually perfect the delisting regime in view of the top-down design of the capital markets so that such regime will be suitable for the characteristics of China’s market. This round of reform will widen the implications of delisting, emphasize the significance of voluntary delisting, highlight the compulsory delisting of companies committing major violations, and consider the need to broaden the definition of major violations. Furthermore, to maintain the overall quality of publicly traded shares and market confidence, stock exchanges should continue to improve and strictly enforce their delisting rules.
The panel also held lively discussions on the strict adherence to trading and financial metrics for compulsory delisting, increasing the protection for the lawful interests of delisted companies’ investors, refining the governing and ancillary rules and arrangements; and, in view of the characteristics of China’s capital markets, the panel commented on and proposed suggestions for the setting of the metrics, designation of responsible entities, legal liabilities, application of regulations, and market regulation. It was unanimously agreed that the delisting regime reform is a very complex and comprehensive initiative that is also fraught with internal and external limitations; and that given the difficulty and the large amount of planning and preparation required in carrying out such a reform, it needs to be moved forward in a proactive and steady manner.
Xiao Gang expressed his gratitude to all attendees for their inputs regarding the delisting regime reform and answered their questions. He said that the CSRC is determined to implement the Opinions of the State Council on Promoting the Sound Development of the Capital Markets, fully realize the positive effects of the delisting regime for listed companies, further improve the functions of the capital markets and institute their reform; and through a market-oriented, law-based, normalized approach, initiate deeper reforms and further improve the delisting regime for listed companies. The CSRC will, after thorough deliberations on the comments and suggestions from all attendees, draft regulations concerning the reformation and improvement of the delisting regime for listed companies and see to their strict compliance, and release such regulations for public comments.
CSRC Vice Chairman Zhuang Xinyi and heads from other departments and organizations also attended the workshop.