Recently, SZSE issued the Guidelines No. 5 on Information Disclosure of Listed Companies - Transactions and Related Party Transactions (the "Guidelines"). This is another proactive move made by SZSE to further improve its system of rules, consolidate the fundamental system, reduce the burden of market players and fully stimulate the market.
The Guidelines are tailored to the needs of investors. On the one hand, it integrates the effective terms in the six existing information disclosure memoranda including the one regarding transaction and related party transaction to streamline the rules; on the other hand, the combination of delegating power and strengthening regulation is deepened, controls that does not meet the development needs to release the market vitality are lifted and cancelled. In view of the market concerns and demands, it further clarifies the regulatory standards and improves the efficiency of rule application.
Responding to market demand and reducing resistance to transactions
To fully respond to market demand, reduce transaction costs and improve transaction efficiency, some principles and regulations are properly refined in the Guidelines. First, the requirements on audit or evaluation are waived for capital increase in a related investment party at the same consideration and the same proportion, and purchase or sale of transaction targets that cannot exert significant influence. Second, the regulation on mandatory disclosure of profit forecast report when purchasing assets with high premium from related parties is cancelled, the principle of "Disclosure or Explanation" for profit compensation is established, and the disclosure requirements are strengthened. Third, the period for resolution of capital occupation caused by sale of assets is relaxed and extended. It shall expire by the end date of the latest financial report to be disclosed rather than before the completion of the transaction.
Promoting reduction of burden and delegation of power to release market vitality
For sectors in which the spontaneous market regulation mechanism works, the number of rules will be reduced to let the market decide for itself and fully release market vitality. For example, the scope of exemption from regulations on joint investment and cooperation with professional investment institutions is expanded from financial listed companies to listed companies whose routine business is investment and financing; the limitation period for investment with professional investment institutions is cancelled, including the period for temporary replenishment of working capital with idle raised funds, for permanent replenishment of working capital with raised funds and the 12 months after repayment of loans with over-raised funds.
Clarifying regulatory standards to strengthen effective constraints
While making efforts to reduce burden, in response to new issues, the Guidelines further clarify the regulatory standards and requirements for some key market concerns. First, for sale transactions with the listed company being the entrusting or entrusted party, it is made clear that the buyout entrustment is subject to the provisions for daily related party transactions, and to other types of entrustment, the provisions for entrustment agency fee may apply. Second, for the waiver of rights, the corresponding criteria shall be applied based on whether the scope of the consolidated statement is changed. Third, for existing transactions before the transaction counterparties become related parties, it is made clear that the review procedures of related party transactions can be exempted and the principle of cumulative calculation for related party transactions does not apply. In addition, the Guidelines also establish a joint regulatory mechanism for information disclosure and on-site inspection to strengthen regulation.
In the formulation of the Guidelines, SZSE solicited opinions from all SZSE-listed companies and fully considered reasonable suggestions from market players to revise and improve the Guidelines, including further clarifying the principle of cumulative disclosure and regulatory requirements for items to be submitted to the general meeting of shareholders for deliberation, optimizing the review procedures for deposits and loans conducted with related parties.
SZSE will continue to follow the guiding principles set forth in the new Securities Law, follow the requirements of "Four Awes" and "One Joint Effort", and adhere to the market- and law-based principle. It will maintain the core role of information disclosure, accelerate the building of a streamlined and efficient regulatory system for listed companies, and lay a solid foundation for the capital market system. At the same time, SZSE will continue to duly implement relevant regulations, resolutely crack down on violations of laws and regulations, strive to refine the market ecology, improve the quality of listed companies, and give better play to the pivotal role of the capital market.