CSRC eyes higher capabilities of companies and better ecosystem

China's top securities regulator recently finalized a new round of a three-year action plan to enhance the quality of listed companies based on extensive research, said a regulatory official on Tuesday.

The China Securities Regulatory Commission will strive to promote continuous enhancement of listed companies' capabilities within three years, optimize the structure of listed firms and significantly improve the market ecosystem, so that the overall quality of listed companies will rise to a new level, said Li Ming, director-general of the CSRC's department of listed company supervision, at the Annual Conference of Financial Street Forum 2022 in Beijing.

The CSRC will further improve the regulatory system of listed companies by adding missing rules, revising rules lagging behind economic and social changes, and straightening out arcane rules.

It will make great efforts in regulating corporate governance and guide listed companies to establish effective corporate governance mechanisms that are in line with China's situation, Li said.

In addition, the regulator will optimize the requirements for IPOs, strictly review the quality of enterprises applying for issuance of securities, improve the regulation mechanism for mergers and acquisitions, consolidate the normalization of delisting, and optimize the bankruptcy reorganization mechanism of listed companies, he said.

In December 2020, the CSRC launched a special two-year campaign to improve the governance of listed companies. It has so far detected 8,073 problems. More than 95 percent of them have been rectified.

The regulator also pushed listed companies to mitigate the risk of share pledging, a practice of using shares as collateral for loans. The number of listed companies with a high level of pledged shares dropped from 702 during the peak period to 282, Li said.

Currently, listed companies are facing new challenges in terms of structural transition as well as the improvement of quality and efficiency. In the first three quarters of this year, although the overall recovery trend of the companies listed on the Shenzhen Stock Exchange is upward, close attention should still be paid to issues like cost pressures and a slow recovery of consumption. The urgency for some companies to promote structural transition has intensified, said Sha Yan, president and CEO of the Shenzhen Stock Exchange.

The bourse will deeply implement the new round of the action plan to promote high-quality development of listed companies via high-quality institutions, regulation and services.

It will build a diversified and inclusive market mechanism that supports innovation. In addition, it will also explore layered and differentiated arrangements for information disclosure, and conduct research on making specific guidelines on information disclosure in major fields like advanced manufacturing, digital economy, and green and low-carbon industries, Sha said.