To implement the guiding principles in the Notice on Further Strengthening Financial Support to the Prevention and Control of the COVID-19 Outbreak issued by five ministries and commissions the requirements of the Announcement on Matters Relating to Doing Well in Auditing and Disclosure of Annual Reports of Listed Companies (the “Announcement”) issued by the China Securities Regulatory Commission (CSRC), on April 8, SZSE released the Notice on Supporting Listed Companies in Doing Well in Auditing and Disclosure of 2019 Annual Reports (the “Notice”) to fully support market players including listed companies in pandemic prevention and control and disclosure of periodical reports by making overall planning and arrangements. The Notice laid down detailed arrangements for listed companies that have difficulties in disclosing audited 2019 annual reports before 30 April 2020 because of the pandemic, showing regulatory consideration, identifying market expectations and maintaining market order.

Making joint efforts to fight the pandemic, and fully demonstrating regulatory care

Since the COVID-19 outbreak, SZSE has looked into the actual difficulties faced by market players affected by the outbreak and took various measures simultaneously to help contain the outbreak. In response to the actual needs of market players during the special time, SZSE provided flexible and considerate frontline regulatory and market services and worked together with all parties in the market to get through the difficult time and fight against the coronavirus. Specific arrangements such as establishing a special service channel for information disclosure, supporting listed companies in holding online investor meetings, and reducing or waiving listing fees to some companies were put in place.

In the meantime, SZSE conducted several thorough investigations verify the impact of the pandemic on SZSE-listed companies and resumption of business and operation. On the whole, SZSE-listed companies did well in business resumption, and most companies actively prepared for the formulation and disclosure of their 2019 annual reports. So far, 359 SZSE-listed companies have, overcoming the difficulties brought about by the pandemic, disclosed their 2019 annual reports. However, some companies stated they were unable to complete auditing and disclosure of the annual reports before April 30 because their main business or operation premises were in regions hit hard by the pandemic. Under the unified arrangement of CSRC, after conducting in-depth extensive surveys and carefully evaluating the impact, SZSE properly integrated information disclosure, the delisting system and investor protection.

The Notice refined and implemented the requirements of CSRC’s Announcement based on the actual situation, making regulation more considerate. Specifically, first, it is specified in the Notice that companies that are unable to disclose their audited annual reports due to the pandemic may postpone the disclosure, but in principle the disclosure date shall not be later than 30 June 2020. Second, arrangements are laid down in the Notice for disclosure of the Q1 report of 2020. Companies that are unable to disclose their 2020 Q1 preliminary earning forecasts due to the pandemic may be exempted from disclosing such information. Third, the annual general meetings of listed companies may be postponed to any time within 2 months after their audited 2019 annual reports are disclosed. Fourth, it is clearly stated in the Notice that to companies that meet the conditions for postponing the disclosure, regulations such as suspension & resumption of trading, delisting risk warning, suspension of listing, delisting, which will be implemented when a company fails to disclose periodical reports within relevant statutory period, will not be applicable, and SZSE will not adopt regulatory measures or disciplinary punishment against them.

Clear expectations and enhanced constraints, effectively protecting investors’ rights and interests

The annual report reflects a listed company’s production and operating activities in a year, showing the quality of the listed company from multiple dimensions such as production and operation, financial status, development strategies, corporate governance and standard operation. Therefore, it provides important information for investors to learn about the listed company and make investment decisions.

Aimed to solve the actual difficulties faced by listed companies and accounting firms, the Notice, according to the principle of “disclosing all information that should be disclosed”, encourages listed companies and accounting firms to overcome difficulties, step up audit work, and disclose audited 2019 annual reports as scheduled as they could. On that basis, the Notice has made proper arrangements for a few companies that are unable to disclose their audited 2019 annual reports due to the pandemic to fully guarantee investors’ right to know.

First, allowing disclosure phase by phase. The listed company that plans to postpone the disclosure of the audited 2019 annual report shall promptly release a disclosure postponement notice and the 2019 main operating results. In the meantime, the listed company shall disclose its 2020 Q1 report on time, and the disclosure shall not be earlier than that of its 2019 main operating results.

Second, ensuring sufficient risk disclosure. The listed company that may be given a delisting risk warning, listing suspension or delisting shall fully reveal relevant risks and disclose its progress on a weekly basis.

Third, urging key minority market players to fulfill their responsibilities. For the listed company that plans to postpone the disclosure of its audited 2019 annual report, when its 2019 main operating results are disclosed, its directors, supervisors and senior management shall ensure the information disclosed is true, accurate and complete and give an opinion on whether there were acts of gross violation such as appropriation of nonoperating funds. In the meantime, the accounting firm responsible for the auditing the annual report shall give special opinions, and state reasons and the degree of audit limitation as well as the estimated time when the auditor’s report will be completed.

Fourth, strengthening in-process and post-event regulation. The listed company that fails to release a notice on postponing disclosure of annual report and the special opinions of accountants auditing the annual report shall not be allowed to postpone disclosure of audited annual report. Companies that are approved for postponing disclosure of its audited annual report but fails to disclose it before 30 June 2020 without giving sufficient reasons regarding the impact of the pandemic and issuing clear supportive opinions from the accounting firm auditing the annual report will be subject to regulations for companies failing to disclose annual reports within the statutory period.

Information disclosure is a basic system of the capital market. Disclosing periodical reports according to laws and regulations is a due responsibility of listed companies and also an important measure to maintain stable and healthy operation of the market. SZSE will, under the unified leadership of CSRC, optimize regulatory business arrangements, improve market service modes, properly carry out information disclosure and business consulting related to the pandemic, steadfastly safeguard the order of the capital market, and effectively protect investors’ legitimate rights and interests.