On December 29, in accordance with the unified deployments of CSRC, SZSE issued the revised Self-Regulatory Guidelines for Listed Companies No.1 - Business Handling (Revised in December 2023) and Self-Regulatory Guidelines for ChiNext Board-listed Companies No.1 - Business Handling (Revised in December 2023). Such guidelines specifically regulate the “information disclosure of companies with delisting risks”, aiming to consolidate and deepen the normal delisting mechanism and effectively protect the legitimate rights and interests of small and medium-sized investors. This revision is another measure of SZSE to deeply implement the guidelines of the Central Economic Work Conference and the Central Financial Work Conference, adhere to the primary responsibility and business of regulation, strengthen the source control of delisting risks and promote the formation of a good market ecology featuring “survival of the fittest”.

On January 13, 2023, SZSE issued the Notice on Strengthening the Information Disclosure of 2022 Annual Reports of Companies with Delisting Risks (hereinafter referred to as the “Notice”) to improve the frequency and pertinency of risk disclosure of companies with delisting risks relating to financial status. As a phased requirement for delisting regulation in 2022, the Notice has played a positive role in driving the orderly release and smooth clearance of delisting risks. On one hand, this revision includes the effective regulatory requirements in the Notice into guidelines, giving the market clear expectations. On the other hand, this revision fully expands the scope of application to cover all types of delisting risks such as risks relating to financial status, trading and severe violations and makes up for shortcomings in terms of new situations and new problems. This revision further strengthens the disclosure of risks, tightens responsibilities of the “key few” and intermediaries, and propels the realization of early discovery, early warning, early exposure and early disposal of delisting risks.

Firstly, strengthening the disclosure of delisting risks relating to financial status around surprise trading and failure to disclose annual reports on time. This revision intensifies the regulation of major transactions such as debt restructuring. It clarifies that listed companies shall not casually disclose major transactions such as debt restructuring and asset donation until major uncertainties are eliminated, so as to avoid misleading investors. Meanwhile, this revision raises the threshold for the implementation of major transactions. In addition to audit, it requires the evaluation and disclosure of the evaluation report for major transactions with shares of companies as the object of transaction. Besides, this revision adds the key risk warning for failure to disclose annual reports. It specifies that once a company has the risk of failing to disclose its annual report on time, it shall give a key risk warning, and promote the early release of the relevant information, to avoid market expected shortfall.

Secondly, adding disclosure requirements for delisting risks relating to trading to prevent companies with CNY 1 per share from improperly affecting stock prices. This revision clearly requires that companies whose stock closing price is less than CNY 1 shall fully explain their performance ability when disclosing announcements such as shareholding increase, repurchase, tender offer and controlling right change, and the exchange can require relevant parties to provide supporting documents. Meanwhile, this revision requires that companies whose stock closing price is close to CNY 1 shall be subject to the above-mentioned provisions.

Thirdly, adding disclosure requirements for delisting risks relating to severe violations to move forward the time point of risk disclosure. For companies that may be involved in forced delisting relating to severe violations, the existing rules require such companies to disclose a risk warning announcement every five trading days after receiving a prior notice of administrative punishment or guilty judgment. This revision further moves forward the time point of disclosure by requiring such companies to disclose a risk warning announcement every month during the filing or prosecution period.

Fourthly, tightening responsibilities of directors, supervisors and senior officers and propelling the audit committee to play a supervisory role. This revision requires the audit committee to focus on the authenticity, accuracy and completeness of financial information in financial accounting reports and periodic reports as well as significant accounting and audit issues in financial accounting reports. This revision also requires that directors, supervisors and senior officers of companies with delisting risk shall supervise and urge their companies to fulfill information disclosure obligations in accordance with laws and regulations and release the relevant information affecting their listing status more prudently.

Next, SZSE will earnestly implement the spirits of the Central Economic Work Conference and the Central Financial Work Conference. In accordance with the unified deployments of CSRC, SZSE will focus on major tasks of comprehensively strengthening regulation, preventing and resolving risks and serving high-quality development. SZSE will urge companies with delisting risks to effectively reveal delisting risks, so as to enhance market predictability, protect the legitimate rights and interests of investors and maintain the steady and healthy development of the capital market.