On October 9, the Circular of the State Council on Further Improving the Quality of Listed Companies (the “Circular”) was released. The Circular has laid down the general requirements on improving the quality of listed companies from the perspectives of accelerating refining the socialist market economic system and promoting modernization of China's system and capacity for governance. Besides, it has made systematic deployment and arrangements in six aspects to improve the quality of listed companies. The six aspects are improving the corporate governance system, assisting listed companies in becoming better and stronger, refining the delisting mechanism, solving prominent problems facing listed companies, increasing the cost for any actions against laws and regulations by listed companies and relevant entities and forming the working synergy to improve their quality. The Circular has fully shown the great attention that the CPC Central Committee and the State Council has paid to improving the quality of listed companies and facilitating healthy, stable development of the capital market. It has set the goal and pointed out the direction for the regulatory services for listed companies. 

Listed companies are foundation stones of the capital market and pillars of the Chinese economy. So far, there are 2,310 companies listed on SZSE, among which, private companies account for nearly eighty percent, and companies in strategic emerging industries for nearly half. The total market capitalization of SZSE-listed companies is nearly CNY 32 trillion. In recent years, SZSE has carried out in depth a series of General Secretary Xi Jinping’s important instructions and guiding principles on improving the quality of listed companies. Under the leadership of China Securities Regulatory Commission (CSRC), SZSE has made it a top priority in its regulatory services for listed companies to improve the quality of listed companies. We deepened reform, strengthened regulation, improved services, and applied a combination of measures to improve the quality of listed companies.

First, SZSE has fully promoted the reform of the ChiNext Board and the pilot project of the registration-based IPO system. We have firmly implemented General Secretary Xi Jinping’s instructions and guiding principles and major decisions and deployment of the CPC Central Committee and the State Council, promoted the reform of the ChiNext Board and the pilot project of the registration-based IPO system according to CSRC’s requirements and the working principles of being “open-minded, transparent, honest and strict”. We have cleared the access to the market to support more quality companies in getting listed for further development. In one month and more since the launch of the reform of the ChiNext Board and the pilot project of the registration-based IPO system, the market has kept stable on the whole, with regulations, rules and technical systems stood the test. The reform has begun to achieve results.

Second, SZSE has earnestly carried out the principles of “system building, no-intervention and zero tolerance”. Taking the opportunity of fully implementing the new Securities Law, we have, with “system building” as the main line, evaluated and optimized the system of self-discipline regulation rules, and advanced the work concerning establishment, modification, abolishment and interpretation of relevant regulations and rules with steady steps. We fulfilled front-line regulatory responsibilities, promoted well-convinced, classified, professional and continuous regulation, had “no intervention” in normal market behaviors, showed zero tolerance for acts in violation of laws and regulations such as financial fraud and occupation of funds, and intensified disciplinary punishment.

Third, SZSE has applied a combination of measures to support listed companies in becoming better and stronger. We have actively leveraged the platform role as a multi-tiered capital market and our resource allocation function, served the reform of state-owned enterprises and assisted in bailing out private companies through market-based means, and supported the development of innovative technology companies, private companies and growth enterprises. In addition, we have promoted M&A restructuring with industrial integration as the main form, and helped listed companies become better and stronger using capital market instruments. In the face of the pandemic, we have kept abreast of companies’ practical difficulties and demands, strengthened business support and guarantee, and quickly rolled out flexible, warm regulatory services such as the special service channel for information disclosure.

Fourth, SZSE has steadily, effectively promoted clearing of market risks. We have kept a close watch on fields, companies and events with higher risks, supported listed companies in disposing non-performing assets and clearing market risks in way of asset sale and swap, bankruptcy reorganization, etc., and realized risk investigation and handling on a regular basis. As of the end of September, the number of SZSE-listed companies involving high-proportion pledge declined by 40% from its peak. In guarding the market access, we have delisted ten companies including LETV since the beginning of the year.

Fifth, SZSE has formed the working synergy to improve the quality of listed companies. We have continued to enhance communication and cooperation with local governments and regulators, entered into strategic cooperation framework agreements, signed the “Action Plan to Jointly Facilitate Improvement of the Quality of Listed Companies”, and enhanced the “three points and one line” regulatory coordination. We have guided listed companies to shoulder their primary responsibility and entity responsibility in standardizing development and improving quality, focused on the “key few”, and strengthened the responsibilities of intermediaries to jointly build a favorable ecosystem to improve the quality of listed companies.

Against the backdrop of fostering a new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other, to further improve the quality of listed companies is of great significance to promote high-quality economic and social development and facilitate healthy, stable development of the capital market. By earnestly studying and fully implementing the requirements set out in the Circular, following the principles of “system building, no intervention, and zero tolerance” and the urges to revere the market, revere the rule of law, hold high professionalism, stay alert to risks, and obtain support from various parties, we will make it an important goal in the regulatory services for listed companies to improve the quality of listed companies, and take solid actions to achieve it. First, SZSE will stick to the reform. We will adhere to the positioning of the ChiNext Board, strengthen market inclusiveness and coverage, put supporting technological innovation in a more prominent position, and promote high-level circulation of technology, capital and the real economy. Second, SZSE will continue to give priority to system building. We will stick to the market-, rule-of-law-based direction, highlight the main line of “system building”, and perform front-line regulatory duties. We will also control risks, maintain stable operation of the market, and protect investors’ legitimate rights and interests. Third, SZSE will continue to be service-oriented. We will enhance the awareness of active service, help raise information disclosure and internal control levels of listed companies, and serve different types of enterprises in using the capital market platform to realize high-quality development. Fourth, SZSE will continue to leverage synergy. We will strengthen cooperation with relevant parties, strive to form a group of listed companies that can reflect high-quality development requirements, focus on building SZSE into “a quality innovation capital center and world-class exchange”, in a bid to better serve economic and social development.