- The SSE further boosts regulatory transformation of information disclosure.
- A news conference is held to report examination on annual reports of listed companie
The Shanghai Stock Exchange (SSE) held a news conference yesterday to report recent progress in the regulatory transformation of listed companies’ information disclosure and progress in the examination on 2013 annual reports. An official of the SSE said that the SSE would strive to transform the regulatory way of information disclosure from prior examination to in-process and aftermath regulation, attach importance to speeding up its response to disclosure of major sensitive information, and intensify self-disciplinary punishment on rule-breaking behaviors. It was learnt that on the basis of the previous work, the SSE would continuously perfect the quick response system and boost regulation on industry information disclosure in the near future.
Attaching importance to the issues concerned by investors in the examination on annual reports
The SSE reported the examination on 2013 annual reports. 2014 is the first year for changing and adjusting requirements for examination on annual reports after launching the business of the SSE direct channel for information disclosure. The SSE comprehensively strengthened in-process and aftermath regulation on the following 4 aspects.
First, normal operation of the business of the direct channel for information disclosure was guaranteed. During the disclosure period of annual reports, the SSE vigorously guaranteed the technical platform of the direct channel for information disclosure, so the market efficiency of disclosure of listed companies’ annual reports was dramatically elevated and investors got a more convenient channel for information about annual reports. Now, investors can browse over 95% of annual reports before 19:00 on the disclosure day.
Second, the SSE attached importance to the issues concerned by investors in the examination on annual reports. The SSE specially examined corporate business modes, industry trends, risk disclosure, financial prediction, and other key information that may exert great influence on investors’ decisions. While examining annual reports, the SSE found that some companies failed to fully disclose information that may exert great influence on investors’ decisions according to requirements for disclosing annual reports, such as cost structure, R&D expenditure, and operation plan and capital need for the next year. Besides, the contents of corporate management’s analysis and discussion submitted by some companies were simple and empty, and the accounting policies of some companies had no pertinence. In the aftermath examination, the SSE required them to make supplementary disclosure in time.
Third, rule-breaking behaviors of information disclosure found in the annual report examination were punished. The SSE had launched disciplinary sanction procedures for public condemnation on Shandong Bohui Paper Industry Co., Ltd. and ST Jilin Chengcheng Group Co., Ltd. as well as relevant responsible people as they failed to disclose 2013 annual reports within statutory time limits, and it issued intent letters of public criticism to or imposed other regulatory measures on the 10 companies which broke rules in disclosure of their business performance predictions. Next, the SSE would continue to timely impose disciplinary sanctions or other regulatory measures on rule-breaking behaviors, such as rule-breaking predictions on business performance, replacing temporary announcements with periodical reports, rule-breaking connected transactions, found in the annual report examination.
Fourth, transparency of the annual report examination was intensified as well.
The SSE would continuously perfect the quick response system.
An official of the SSE said that according to the clear requirement that securities exchanges should fully take charge of frontline regulation on information disclosure related to listed companies’ periodical reports, temporary announcements, and others, build authoritative regulation on information disclosure, and cement self-disciplinary management (put forward at the national securities and futures regulation meeting held in 2014), the SSE fixed fundamental thoughts on frontline regulation on information disclosure, and specified its role and duties for regulation on information disclosure. The SSE’s self-disciplinary regulation on information disclosure should orient to investors’ needs, and depend on the business of the direct channel for information disclosure. The SSE should strive to transform the regulatory way of information disclosure from prior examination to in-process and aftermath regulation. In addition, the SSE would focus on accelerating its response to disclosure of major sensitive information, and strengthen self-disciplinary punishment on rule-breaking behaviors.
It was learnt that the SSE completed the following two work items recently on the basis of the previous work.
First, the SSE continuously perfected the quick response system. The SSE Company Regulation Department had built the morning conference system to analyze or predict aftermath regulation, abnormal fluctuations of stock prices, and monitoring information from morning news on the previous day before opening on the very day, and take regulatory measures in time. For example, Shanghai Prosolar Resources Development Co., Ltd. released an emotional announcement on the evening of April 29, the SSE promptly launched the quick response system. It suspended trading of shares in Prosolar Resources before opening on the next day, issued an inquiry letter to the company, and simultaneously report relevant information on its official micro-blog. Later, the SSE interrogated the company, and required it to rectify and explain to the market. Finally, the SSE issued its comment on this issue on its micro-blog.
Second, the SSE boosted regulation on industry information disclosure. The SSE is studying feasibility of industry regulation on information disclosure, namely, regulators regulate listed companies according to industry categories. Industry regulation can enhance regulators’ sensitivity to industries, and risks of listed companies can be found through comparison in the same industry, which can improve anticipating and handling capabilities of regulators. Furthermore, on the basis of summarizing the actual implementation of guidance documents on information disclosure of industries such as finance, real estate, and mining and quarrying, the SSE would continue to issue guidance documents on information disclosure for key industries, with an aim to enhance effectiveness and pertinence of listed companies’ information disclosure and help investors to get information they need. As the regulation on industry information disclosure involves adjustments to the work system and the division of personnel, the SSE would consider in a comprehensive way and steadily propel the work.