The decision by Hong Kong's Securities and Futures Commission (SFC) to seek liquidation of Hong Kong-listed China Metal Recycling (Holdings) Ltd - the first time the SFC has ever sought to wind up a listed company - serves as a lesson to its mainland counterpart, the China Securities Regulatory Commission (CSRC), as to how regulators can be more proactive in protecting the interests of shareholders and investors.

The SFC has applied to a court in Hong Kong to liquidate China Metal Recycling and has appointed provisional liquidators. Three people connected to the case had been arrested by police as of Tuesday.

The watchdog was acting on evidence suggesting China Metal Recycling had overstated its business size and revenues in its IPO prospectus and annual report in 2009. The SFC suspended trading of the company's stock in January after the company failed to respond to the allegations.

Whether Hong Kong court will continue to appoint liquidators to China Metal Recycling will be discussed at a hearing Friday, where the company can respond to the order made against it.

The unprecedented move by the SFC is its latest effort to boost market confidence following a series of accounting scandals of mainland companies listed in the US. Effective October, the Hong Kong securities regulator will make IPO sponsors criminally liable for any misleading information in the prospectus.

Meanwhile on the mainland, the CSRC has also tightened regulations in an attempt to clamp down on market malpractice. However, its endeavors seem insufficient when compared to its Hong Kong counterpart.

For example, while the SFC is fully prepared to revoke sponsor licenses and has done so in the past, in similar cases the CSRC has only temporarily suspended licenses.

The CSRC has also failed to improve the mainland stock market's procedures for delisting failing or fraudulent companies, which has hit investor confidence. China Tungsten and Hightech Materials Co suffered losses from 2007 to 2009 but the company was allowed to resume trading in December 2012.

Wanfu Biotechnology (Hunan) Agricultural Development Co Ltd was not delisted from the Shenzhen Stock Exchange despite its financial fraud.

The CSRC should be far stricter in such cases. It should also increase transparency and clarify its policies and regulations, particularly regarding the ongoing suspension of IPOs on the mainland.

The writer is an editor with the Global Times. bizopinion@globaltimes.com.cn