No companies ‘above the law' as China plans new listing, delisting rules

By Chi Jingyi Source: Global Times Published: 2020/12/14 22:27:33

Fintech, digital economy, internet companies no longer 'above the law'

File photo shows the exterior view of Shanghai Stock Exchange at Pudong New Area in Shanghai, east China. (Xinhua)

The Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange on Monday called for public opinion on revised listing and delisting rules, adding a delisting evaluation indicator of defects in information disclosure and standardized operations.

Analysts said the new rules will enhance supervision of the financial markets in China and improve the environment of the capital markets.

Wang Peng, an assistant professor at the Gaoling School of Artificial Intelligence at the Renmin University of China, said that the exchanges' proposed new rules are a sign that China is stepping up supervision of its financial markets.

"The innovative development of fintech enterprises, digital economy enterprises, platform economy enterprises and internet giants does not match the traditional regulatory system, and these companies have become 'above the law'. The new institutional reform is equivalent to bringing all these new-economy enterprises under the scope of supervision, and it will solve the problem of some industry giants being 'too big to fail'," Wang told the Global Times on Monday.

Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, said that the new rules will be applicable to new-economy companies, and they will lead to the survival of the fittest.

"The new rules quantify many of the indicators and will make enforcement easier and more law-based. Although these are revised versions issued for public opinion, there will be no big changes in the rules," Dong told the Global Times on Monday.

Wang said that Alibaba's Ant Group could have been a case of too-big-to-fail. Although its IPO was not suspended as a result of the new rules, it will be supervised under the new regulations, along with all other listed companies. 

If a listing was suspended before the new regulations took effect, the old regulations should be applied to judge whether to resume the listing or to terminate it, and the old regulations should also be applied to delisting, said a spokesperson of the SSE on Monday, adding that the objective needs of a smooth market transition have been considered.

The SSE said in a statement in November, just ahead of the planned IPO of Ant Group, that "major issues", including the summoning of Ant Group's actual controller, and Ant Group's report of changes to the regulatory environment, meant that Ant Group might fail to meet "listing conditions or information disclosure requirements". 

Analysts said the new rules would be in line with China's fast-developing new-economy market, with stricter and more complete listing rules to accommodate more high-quality and compliant listed companies, as well as delisting rules that will accelerate the elimination of low-quality and shell companies.

The two stock exchanges plan to shorten the delisting period to 15 trading days from the current 30 days, and they will set no trading limit on the first day of the delisting period.

Since 2019, the number of companies forced to delist in Shenzhen has reached 18.

"China's economy has embarked on a dual circulation strategy, which attaches importance to further opening-up, for example, in the financial sector. Foreign-funded enterprises may be listed in China through joint ventures. Also, foreign investment institutions and securities firms may directly enter China's financial sector. 

"To achieve the goal, China has to be well prepared before welcoming outsiders, which means that China's domestic financial market has to be advanced, with high-quality companies listed and zombie companies, shell companies and non-compliant companies delisted as soon as possible," said Wang.

Newspaper headline: New listing, delisting rules on stock markets

Posted in: MARKETS

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