The CSRC will improve the new regulations for delisting new life or the first case of delisting

Abstract Recently, many people’s hearts have been covered with a haze after the “Longevity Biology” major vaccine incident. The issue of morality, both the state and the people, has already issued many condemnations and criticisms. According to the July 29th news, according to the "PRC criminal proceedings...

Recently, after the "longevity" major vaccine incident, many people have been covered with a haze. The issue of morality, both the state and the people, has already issued many condemnations and criticisms. According to the news on July 29, according to Article 79 of the Criminal Procedure Law of the People's Republic of China, the Public Security Bureau of Changchun New District is suspected of producing and selling inferior drugs, and 18 people, including Gao Moufang, Chairman of Changchun Changsheng Biotechnology Co., Ltd. The suspect filed a petition with the procuratorate for approval of the arrest.

However, from the perspective of the capital market, the stock price of “Changsheng Bio” has been falling since the outbreak of the incident, and even fell for six consecutive days, causing many small and medium-sized investors to suffer heavy losses. In the future, will companies that are involved in public safety violations such as “longevity creatures” be forced to withdraw from the market?

On the evening of July 27, the CSRC issued the "Decision on Amendment" (hereinafter referred to as "Delisting Opinion"), which will take effect on July 27, 2018. This "suddenly" document seems to give the exact answer.

According to the "Delisting Opinion", if a listed company constitutes a fraudulent issue, a major information disclosure is illegal or other major illegal acts involving national security, public safety, ecological security, production safety and public health and safety, the stock exchange shall make it strictly according to law. The decision to suspend or terminate the listing of the company's stock.

That is to say, in the future, listed companies will be required to withdraw from the market in addition to fraudulent issuance and major information disclosure. Any major violation of public safety and life safety will also touch the red line of forced delisting.

Add five major illegal delisting situations

Since the beginning of this year, five companies have been delisted from the domestic capital market, including Jilin Jien Nickel Co., Ltd. (*ST Jean), and Shenji Group Kunming Machine Tool Co., Ltd. (*ST Kunji) Silver-Based Carbon New Materials Group Co., Ltd. (referred to as "ene carbon" or "decene carbon"), Jinya Technology Co., Ltd. (referred to as Jinya Technology), Jiangsu Yabate Technology Co., Ltd. (referred to as " Yabate").

In this regard, many market participants said that the domestic delisting of normalization has begun. It is worth mentioning that the system content related to the delisting of listed companies has recently ushered in perfection.

From the "Delisting Opinions" promulgated by the CSRC on the 27th, the contents of this improvement and revision mainly include three aspects: one is to strengthen the subject responsibility of the delisting system of the stock exchange, and to clarify that the stock exchange should be listed. The company suspends listing and terminates the listing implementation rules due to major illegal acts; the second is to implement the relevant responsibilities of the controlling shareholder, actual controller, directors, supervisors, senior management personnel, etc. of the mandatory delisting company due to major illegal activities, emphasizing that it should cooperate with relevant parties. Do a good job in delisting related work and fulfilling related duties.

The third is to perfect the main situation of the major illegal violation of the law, and it is also the most closely concerned content of public opinion. Even when the news comes out, many people think that this is the "longevity organism" of the sword referral vaccine event. The “Delisting Opinions” clarify that a listed company shall constitute a fraudulent issue, a major information disclosure violation, or other major illegal activities involving national security, public safety, ecological security, production safety, and public health and safety. The basic institutional requirements for suspending and terminating the company's stock trading decisions. The "longevity" vaccine crisis is a major violation of public health and safety.

In this regard, Dong Dengxin, director of the Institute of Financial Securities of Wuhan University of Science and Technology, said in an interview with the reporter of China Sankei Shimbun that the "Delisting Opinion" is a "Opinion on Reforming and Strictly Implementing the Delisting System of Listed Companies". In the revision, it has made more detailed and important arrangements for the mandatory delisting of major illegalities, making the boundaries of mandatory illegal delisting more clear and more specific. The five new cases of major violations, once they occur, have a very large social impact, and it is necessary to list them separately in the major illegal circumstances of the delisting system.

For example, the quality of medicines and foods has always plagued the people of our country. The CSRC “say no” to relevant unsafe companies in the capital market and drive them out of the market. This aspect is the maintenance of the rights and interests of the people; on the other hand, it is also through the deterrent and restraint of the system, which has a decisive effect on the relevant enterprises and is conducive to improving the quality, safety, health and safety of the overall medical and food products.

Influence more than "longevity creatures"

However, "Longevity Creatures" may become the first enterprise under the new delisting rules, but it will never be the only one.

From the content of the new regulations, such as: listed companies involved in environmental pollution and ecological damage. For example, in terms of production safety, in the process of mining such as coal mines and iron mines, some enterprises have not provided necessary safety facilities, and enterprises that have put the lives of miners behind them will be sentenced to major violations in the future if a major accident is triggered. Strictness will also be included in the case of forced delisting.

In Dong Dengxin's view, a listed company should be a representative of a good company, and it should assume the necessary social responsibilities. Whether it is drug and food safety, ecological environmental protection, or the maintenance of labor rights from the perspective of production safety, once the relevant listed companies touch the bottom line in the future, they are qualitatively very bad.

Moreover, the "raid" release of the "Delisting Opinion" may pose a negative threat to the four stocks for A-shares.

Tang Hewen, general manager of Nanping Business Department of Galaxy Securities, pointed out that the first category is food and beverage, pharmaceutical manufacturing, brewing, and some listed products have reported defects in the quality of their products. The second category is high pollution and high emission accidents. Coal, chemical, non-ferrous, especially chemical accidents are still frequent, and chemical listed companies are hit hard. The third category is the company that has suspended the listing or delisting risk due to the violation of the letter and the year-on-year loss. The fourth category is the sub-new shares with a decline in performance. Some of the new shares have become very quick after listing. The company executives will inevitably attract the attention of the regulatory authorities with the help of high-transfer and large-scale hand-holding.

Small and medium investors "back pot"?

Although the CSRC’s move to improve the delisting regulations is significant. However, the reporter saw in the message area that many investors said: "Delisting is a punishment for the problematic enterprises, but the losses caused by the enterprises to small and medium-sized investors are irreparable."

Take "longevity organisms" as an example. The reporter of China Sankei News contacted the China Securities Small and Medium-sized Investor Service Center (hereinafter referred to as the Investment Center) and learned that since the outbreak of the vaccine incident, the center has been receiving calls from small and medium investors for the past few days, expressing anger and demanding legal Rights protection.

The investment center is clear about this, and a small number of illegal people should be distinguished from the majority of small and medium investors. The main responsibility of this vaccine event lies in the malicious violation of the national drug production regulations by the responsible body of the chairman, actual controller and senior manager of Changsheng Bio, and the inferior vaccine products are discharged to the market, ignoring the life and health of the people, resulting in the listed company being exposed to the public. Collectively condemned, the company's stock will also face the possibility of being warned, suspended or terminated.

Since the incident occurred on July 16, 2018, the stock price of “Changsheng Bio” has fallen sharply, and the majority of small and medium investors have suffered accidental losses. It can be said that in addition to the vast number of consumers as direct victims, small and medium-sized investors of "longevity organisms" are also victims and victims of this incident.

The investment center will continue to track the progress of the situation, paying close attention to the stock price trend of longevity, asset pledge and freezing, and the company's development trend. It will take timely measures such as sending letters, attending shareholders' meetings, filing lawsuits, and making public voices to safeguard the legitimate rights and interests of minority shareholders. .

The stock market is risky, and investment needs to be cautious. Although it is an old saying, it is a truth that investors can easily ignore. Then, for other enterprises that have fraudulent issuance, illegal transactions, and major violations of the law, once the delisting is triggered, how should the interests of small and medium investors be further safeguarded?

"Investors who have been delisted because of major violations of the law, there are two ways, one is to vote with their feet, the other is to actively seek legal channels to make claims, this is the only way for the rule of law economy in the market economy." Dong Dengxin It is said that in the stock market, investment is not all safe. Benefits and risks are always accompanied. When we invest in a stock, we must have a basic understanding of the company, industry attributes and its safety regulatory requirements. We must also beware of risks while pursuing the benefits, and do not take the chance to rebound.

Again, "One dollar delisting standard"

Subjectively, investors need to raise risk awareness. Objectively speaking, our capital market also needs a more complete delisting system. In the future, the delisting system of A shares should further strengthen the market-based delisting channel.

As mentioned above, five companies have already withdrawn from the market this year. Some of them are due to losses for three consecutive years. Some are forced to delist from the market due to fraudulent issuance and major violations. Others are suspected of “significant violations”. And was severely punished.

Then, in addition to raising risk awareness, investors have no “active attack” countermeasures against inferior stocks? The answer is yes.

For example: "One dollar delisting standard." On the NASDAQ exchange, if a company’s stock market price is less than the minimum transaction price of US$1 for more than 30 trading days, it will issue a delisting warning to the company and limit its performance within 90 days to restore the market price of the stock. To an "acceptable" level above the minimum trading price, otherwise the company will be ordered to delist. Netease suffered a delisting crisis because its share price continued to be below $1.

"The US's 'one dollar delisting standard', in short, is the right to authorize investors to vote with their feet. As long as investors believe that they are not listed, they can hit the stock price below one dollar. At this point, Our A-share market is still a big gap," Dong Dengxin said.

However, the good news is that this kind of market-oriented delisting standard, China actually launched in 2012. According to the reporter's understanding, in 2012, China's Shanghai and Shenzhen stock exchanges introduced the “one dollar delisting rule” for the first time. That is, the stocks of A-share listed companies have an average closing price of less than 1 yuan for 20 consecutive trading days, and they can immediately “unlist”. . But unfortunately, there is still no listed company in China that has withdrawn from the market because of this standard.

Dong Dengxin emphasized that this shows that our A-share investors are not quite capable of voting with their feet. Therefore, at this point, we should guide investors to vote with their feet through the presupposition of the system, and increase the power of the “one yuan delisting standard”. As long as the investors are willing, they can put the stock price of a company under one yuan. Once the time reaches 20 trading days, the company will delist the market without any additional conditions.

We hope that this system will be able to show its brilliance in the A-share market in the future. Through investor consciousness, investors can use their feet to vote to play a deterrent role for investors in inferior enterprises. This is crucial, and it is also an important sign that the market is mature and investors are mature.

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