Original title: A-shares enter the era of normalization of delisting, and the regulatory authorities will further improve the rules. Source: Securities Times.com
The era of normalization of delisting has arrived! Since the beginning of this year, many listed companies are facing the risk of delisting, or have delisted due to various reasons, and the pattern of survival of the fittest in the capital market is taking shape.
The reporter learned that the China Securities Regulatory Commission will further strengthen the main responsibility of the exchange in the implementation of the delisting, strengthen the guidance and supervision of the exchange, and effectively ensure the smooth and orderly operation of the delisting. By improving merger and reorganization rules, simplifying procedures, and improving efficiency, we support listed companies to revitalize their stocks through reorganization and listing, liquidation-type asset replacement, and clear risks. Work closely with the Supreme Court to improve the bankruptcy and reorganization mechanism of listed companies.
New delisting regulations face the deep water area
For a long time, compared with mature markets, my country’s capital market has not been delisted. Some companies that have lost their ability to continue operations have been stranded in the capital market for a long time, severely restricting the efficiency of resource allocation, and some companies that have seriously violated laws and regulations have not been cleared in time, disrupting market order. There are not many cases of delisting, market constraints have not yet played an effective role, and the channels for delisting are relatively single.
In 2020, the new “Securities Law” came into effect. In October of that year, the State Council’s “Opinions on Further Improving the Quality of Listed Companies” proposed strict delisting supervision, optimizing delisting standards, simplifying delisting procedures, and smoothing diversified exit channels for listed companies. In November 2020, the “Implementation Plan for Improving the Delisting Mechanism for Listed Companies” reviewed and approved by the Central Deep Reform Commission pointed out that it is necessary to improve delisting standards, simplify delisting procedures, broaden multiple exit channels, tighten delisting supervision, and improve normalized exit mechanisms. . Under the guidance and deployment of the China Securities Regulatory Commission, the Shanghai and Shenzhen Stock Exchanges actively implemented and improved the delisting system. In December 2020, it revised and issued self-discipline rules such as the “Stock Listing Rules”, “GEM Stock Listing Rules”, “Trading Rules”, and “Implementation Measures for the Re-listing of Delisted Companies”.
Specifically, the relevant delisting rules focus on the ability of listed companies to continue to operate, delete the suspension of listing, resumption of listing and other regulations that are difficult to meet the requirements of the new securities law, and improve the delisting standards, simplify the delisting process, and optimize transaction arrangements. Fully revised. At present, the delisting system is becoming more and more complete. Delisting indicator systems for financial, market, regulatory, major illegal delisting and active delisting have been formed. Market expectations have been continuously strengthened, and normalized delisting has gradually advanced.
Statistics show that in 2020, a total of 31 companies will exit through various channels, setting a new record high. Among them, 16 were delisted compulsorily, including 6 delisted financial indicators, 9 delisted at face value (Dongfeng B was the first pure B-share delisted at face value), 1 delisted in a regulated category; 15 restructured delisted, including 7 One company was reorganized and listed, seven companies were liquidated assets, and one company was merged. From January to July 2021, 96 companies have been subject to delisting risk warnings due to the new regulations, and 24 companies have been delisted, of which 17 were forced to delist, 6 were reorganized and delisted, and 1 was voluntarily delisted.
Tighten the institutional fence firmly Severe crackdown on avoiding delisting
It is worth noting that the 2021 semi-annual report is a key window for observing the delisting risks of listed companies. Because the current rules clearly require that the “net profit” is deducted before and after non-recurring gains and losses, whichever is lower, “operating income” should be deducted from income that has nothing to do with the main business and does not have commercial substance. In addition, the comprehensive cross-application of financial delisting indicators has further tightened the implementation of delisting, and the institutional fence has been firmly tightened. This means that in the past, some companies used to repeatedly manipulate accounting indicators to adjust “reported” profits, or rely on surprise construction transactions in the second half of the year to try to protect their shells, which is no longer feasible.
The delisting rules have greatly shortened the process of delisting. If the relevant company hits the delisting index for two consecutive years, it will quickly reach the end of the delisting. For example, *ST Shengya sold penguins on a large scale in the fourth quarter of 2020, and the sales price was significantly higher than the previous year’s selling price, and the accounting treatment of penguin sales was obviously inconsistent with the previous year and did not meet the requirements of accounting standards; *ST In the fourth quarter of last year, Global’s overseas revenue increased significantly, which was not in line with the industry trend, and the revenue mainly came from a single customer. The exchange inquired about the above companies in accordance with the law, and deducted in accordance with the regulations. These companies have also been issued a delisting risk warning because they touched the financial portfolio indicators.
The reporter learned from the Shanghai and Shenzhen Stock Exchanges that the exchange is currently studying and optimizing the relevant regulatory requirements for the deduction of operating income to facilitate listed companies and accounting firms to do the relevant work. Strengthen the supervision of revenue deduction, and focus on whether there are new trading businesses, unreasonable revenue recognition, and revenue deductions that are not deducted for companies with operating revenues close to 100 million yuan. The method will take such measures as inquiring and paying attention, requiring annual audit accountants to verify, interviewing, reporting to the China Securities Regulatory Commission, and submitting inspections. In response to deductions and undeducted items, the company will be urged to correct in time and prompt the risks; for deductions of “income without commercial substance”, full attention will be paid to the authenticity of the relevant income confirmation, and the relevant departments will be reported to help the relevant departments to seriously investigate and deal with financial fraud .
Continue to strengthen delisting supervision
Since the beginning of this year, the stock prices of companies on risk warning boards in the Shanghai and Shenzhen stock markets have risen sharply. A few of them have not improved their operations, but their stock prices have continued to rise. There are obvious signs of speculation, which has aroused market attention.
For example, *ST Tiancheng, the stock price of the company’s stock has risen continuously without warning since late May, which makes people feel “nonsensical”. The company has issued risk warnings many times and applied for suspension of trading for verification. The announcement shows that there is no significant undisclosed information that should be disclosed, and there is no capital operation of alcohol assets, and it is clearly stated that the company is currently under investigation and cannot issue shares to purchase assets. And other major asset restructuring matters.
In this situation, the company’s stock price still fluctuates greatly, and it has obviously become a tool for speculators. As of August 31, the company has applied for the suspension of trading 4 times. Another example is *ST Zhongxin. Since the company issued the pre-restructuring announcement, the stock price has continued to rise at the limit. However, considering the progress of the restructuring and the current company status, it is extremely difficult to complete the restructuring within this year.
The risk of delisting warns of irrational rises in the company’s stock price, which seriously disrupts the order of the capital market, which is not conducive to the discovery of market prices and the clearing of market ecology. In response to the semi-annual report, the exchange issued letters of inquiry to a number of companies.
In response to issues such as changing accounting policies at will, changing auditors, purchasing audit opinions and other ways to achieve the purpose of protecting the shell, the exchange will consolidate the responsibilities of intermediary agencies. First, it is planned to further clarify the responsibilities of annual audit accountants in the rules, and require annual audit accountants to focus on the issue of income deductions in their audit work. The second is to further strengthen the post-mortem review of the annual report and require the annual review accountant to check relevant issues and express clear opinions. The third is to organize training to help deepen listed companies and annual audit accountants to deepen their understanding of the new delisting regulations, and use case analysis and other methods for publicity and guidance in a timely manner.
In addition, for key cases of malicious evasion of delisting, the exchange will increase special on-site inspections and have clear inspection opinions. Put the inspection work ahead, put the supervisory attitude ahead, clarify market expectations in a timely manner, and effectively promote normalized delisting work to ensure “recession and stable retreat.”