China urges high-quality development of listed companies

The State Council issued a circular on Oct 9, outlining plans to improve the quality of listed companies, in an effort to achieve healthy development of the capital market and perfect the socialist market economic system.

Although the number of China’s listed companies has increased significantly in recent years, problems still exist, such as non-standard management and lack of quality in development, the circular said, adding that, due to the COVID-19 outbreak, listed companies now face new challenges.

The circular urged efforts to deepen supply-side structural reform in the financial sector, strengthen the mechanism construction for the capital market, and help listed companies develop in a sustainable way.

It said that listed companies should standardize their internal management systems, clarifying the duties and legal responsibilities of controlling shareholders, actual controllers, directors, supervisors and senior managers.

And listed companies, shareholders and other relevant parties should disclose true, accurate and complete information in a timely manner.

Related departments, including the China Securities Regulatory Commission and the State-owned Assets Supervision and Administration Commission of the State Council, will also support and help listed companies to grow and develop.

A registration-based bond issuance system will be carried out, and listing standards will be optimized to help high-quality companies go public on the stock market.

Cultivation and assistance for potential companies will be strengthened.

Market-oriented mergers and acquisitions will be promoted to encourage listed companies to revitalize their assets and achieve transformation for further development, according to the circular.

And the financing system of listed companies should be improved through strengthening the coordination and balance between the financing end and the investment end, and guiding listed companies to optimize their financing arrangements based on both development needs and market conditions.

The incentive and restraint mechanism for listed companies should be improved as well.

In addition, the circular urged efforts to refine the delisting mechanism, through improving delisting standards, simplifying procedures, intensifying supervision and broadening exit channels.

Related departments should solve prominent problems facing listed companies, including defusing the risks of stock pledges, dealing with capital occupation and illegal guarantees, and strengthening policy support for listed companies severely affected by major emergencies, according to the circular.

Furthermore, listed companies and related entities should pay higher costs for any actions against laws and regulations. And related departments should strengthen supervision, and urge listed companies as well as intermediary agencies to fully accept their responsibilities.