The people's governments of all provinces, autonomous regions and municipalities directly under the Central Government, all Ministries and commissions of the State Council and all directly affiliated institutions:
The capital market plays a pivotal role in the operation of finance, and listed companies are the cornerstone of the capital market. Improving the quality of listed companies is an inherent requirement for promoting the healthy development of the capital market and an important part of accelerating the improvement of the socialist market economy system in the new era. Since the issuance of the "Notice of The State Council on Forwarding the Opinions of the China Securities Regulatory Commission on Improving the Quality of Listed Companies" (Guo Fa [2005] No. 34), the number of listed companies in China has increased significantly and their quality has continued to improve, playing an increasingly prominent role in promoting the development of the national economy. However, it should also be noted that problems such as non-standard operation and governance of listed companies and low development quality remain prominent, and there is still a gap compared with the requirements of building a modern economic system and promoting high-quality economic development. At the same time, in the face of the impact of the novel coronavirus pneumonia, listed companies are confronted with new tests in their production and operation as well as high-quality development. To further enhance the quality of listed companies, the following opinions are hereby put forward.
I. General Requirements
Vigorously improve the quality of listed companies. We will adhere to the principle of giving equal weight to existing and new stocks, and combining symptomatic and fundamental treatment. We will leverage the joint efforts of all parties, strengthen continuous supervision, optimize the structure and development environment of listed companies, significantly enhance the operational standardization of listed companies, continuously improve the quality of information disclosure, effectively solve prominent problems, and significantly increase their sustainable development capabilities and overall quality. To provide strong support for building a standardized, transparent, open, dynamic and resilient capital market and promoting high-quality economic development.
Second, enhance the governance level of listed companies
(1) Standardize corporate governance and internal control. Improve the corporate governance system and rules, and clearly define the boundaries of duties and legal responsibilities of controlling shareholders, actual controllers, directors, supervisors and senior management personnel. The controlling shareholders and actual controllers shall fulfill their obligations of good faith, safeguard the independence of the listed company, and effectively protect the legitimate rights and interests of the listed company and its investors. The shareholders' meeting, the board of directors, the board of supervisors and the management team should operate in accordance with laws and regulations. Directors, supervisors and senior management personnel should perform their duties with loyalty and diligence, and give full play to the role of independent directors and the board of supervisors. Establish a good communication mechanism between the board of directors and investors, and improve the channels and methods for institutional investors to participate in corporate governance. Scientifically define the rights and responsibilities of the relevant parties in the governance of state-controlled listed companies, and improve the governance mechanism of state-controlled listed companies with Chinese characteristics. Strictly implement the internal control system of listed companies, accelerate the promotion of the internal control standard system, and enhance the effectiveness of internal control. Strengthen the bottom-line requirements for the governance of listed companies, advocate best practices, enhance the disclosure of governance status information, and promote the improvement of the scientific nature of decision-making and management. Carry out a special campaign on corporate governance, and through self-examination by the company, on-site inspection and urging rectification, effectively enhance the level of corporate governance. (Responsible by the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the Ministry of Finance, the China Banking and Insurance Regulatory Commission and other units)
(2) Enhance the quality of information disclosure. With the goal of enhancing transparency, the rule system should be optimized to urge listed companies, shareholders and relevant information disclosure obligors to disclose information truthfully, accurately, completely, timely and fairly. Guided by the demands of investors, improve the information disclosure standards by industry, optimize the disclosed content, and enhance the pertinence and effectiveness of information disclosure. Strictly enforce enterprise accounting standards, optimize the rules for information disclosure and reporting, and enhance the quality of financial information. Listed companies and other information disclosure obligors shall fully disclose the information necessary for investors to make value judgments and investment decisions, and ensure that the information is concise, clear and easy to understand. Relevant departments and institutions should, in accordance with the rules of the capital market, support and cooperate listed companies in fulfilling their information disclosure obligations in accordance with laws and regulations. (Responsible by the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the Ministry of Industry and Information Technology, the Ministry of Finance and other units)
Iii. Promote listed companies to become better and stronger
(3) Support high-quality enterprises to go public. The securities issuance registration system will be fully implemented and carried out in phases. Optimize the standards for issuance and listing and enhance inclusiveness. Strengthen the cultivation and guidance of enterprises planning to go public, and enhance the standardization level of such enterprises. Encourage and support pilot enterprises of mixed-ownership reform to go public. Give full play to the positive role of equity investment institutions in promoting corporate governance optimization, innovation and entrepreneurship, and industrial upgrading. Vigorously develop venture capital, cultivate technology-based and innovative enterprises, and support the growth and expansion of manufacturing single champions, specialized, refined, distinctive and innovative "little giants" and other enterprises. Give full play to the positive role of the National Equities Exchange and Quotations, regional equity markets and property rights trading markets in fostering enterprises to go public. (Responsible by the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Industry and Information Technology and other units, as well as the provincial people's governments)
(4) Promote market-oriented mergers and acquisitions and reorganizations. Give full play to the main channel role of the capital market in mergers and acquisitions and reorganizations, and encourage listed companies to revitalize their existing assets, improve quality and efficiency, and transform and develop. Improve the systems for asset reorganization, acquisition and spin-off listing of listed companies, enrich payment and financing tools, and stimulate market vitality. Give full play to the role of securities market prices, valuations and asset evaluation results in the pricing of state-owned assets transactions, and support state-owned enterprises in carrying out mixed-ownership reform relying on the capital market. Support domestic listed companies in issuing shares to purchase high-quality overseas assets, allow more qualified foreign investors to make strategic investments in domestic listed companies, and enhance the international competitiveness of listed companies. Study and broaden the channels for multiple parties such as social capital to participate in the mergers and acquisitions and reorganizations of listed companies. (Responsible by the China Securities Regulatory Commission, the Ministry of Industry and Information Technology, the State-owned Assets Supervision and Administration Commission of the State Council, the National Development and Reform Commission, the Ministry of Finance, the People's Bank of China, the Ministry of Commerce, the State Administration for Market Regulation, the State Administration of Foreign Exchange and other units, as well as the provincial people's governments)
(V) Improve the financing system for listed companies. Strengthen the coordination and balance between the financing and investment ends of the capital market, and guide listed companies to optimize their financing arrangements by taking into account both development needs and market conditions. Improve the issuance conditions for refinancing of listed companies and study the introduction of more convenient financing methods. Support listed companies in conducting long-term debt financing through means such as bond issuance. Steadily develop preferred stocks and equity-bond combined products. Vigorously develop equity funds. Enrich risk management tools. Explore the establishment of a long-term assessment mechanism for institutional investors to attract more medium - and long-term funds to enter the market. (Responsible by the China Securities Regulatory Commission, the Ministry of Finance, the People's Bank of China, the National Development and Reform Commission, the China Banking and Insurance Regulatory Commission and other units)
(6) Improve the incentive and restraint mechanism. Improve the equity incentive and employee stock ownership systems of listed companies, and make more flexible arrangements in terms of objects, methods and pricing. Optimize the policy environment, support all types of listed companies in establishing and improving long-term incentive mechanisms, strengthen the sharing of interests between workers and owners, better attract and retain talents, and fully mobilize the enthusiasm of employees of listed companies. (Responsible by the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the Ministry of Finance and other units)
Iv. Improve the exit mechanism for listed companies
(7) Strictly supervise delisting. Improve delisting standards, simplify delisting procedures, and intensify delisting supervision. We will crack down on malicious delisting behaviors through financial fraud, interest transfer, market manipulation and other means, and promptly remove companies that lack the ability to sustain operations and seriously violate laws and regulations to disrupt market order from the market. Strengthen the accountability for entities that violate laws and regulations. Support investors in safeguarding their rights and interests in accordance with the law and protect their legitimate rights and interests. (Responsible by the China Securities Regulatory Commission, the Supreme People's Court, the Ministry of Public Security, the State-owned Assets Supervision and Administration Commission of the State Council and other units, as well as the provincial people's governments)
(8) Expand diversified exit channels. Improve systems for mergers and acquisitions, reorganizations, and bankruptcy reorganizations, optimize processes, enhance efficiency, and smooth out diversified exit channels for listed companies such as voluntary delisting, mergers and acquisitions, and bankruptcy reorganizations. Relevant regions and departments should adopt comprehensive measures to support listed companies in clearing risks through means such as mergers and acquisitions, reorganizations, and bankruptcy reorganizations. (Responsible by the China Securities Regulatory Commission, the Supreme People's Court, the Ministry of Justice, the State-owned Assets Supervision and Administration Commission of the State Council and other units, as well as the provincial people's governments)
V. Addressing Prominent issues of listed Companies
(IX) Actively and steadily defuse the risks of stock pledge of listed companies. Adhere to controlling the increase and resolving the existing issues, establish a risk disposal mechanism for stock pledges of listed companies with the participation of multiple departments, strengthen consistent supervision both inside and outside the exchange, and enhance the sharing of pledge information. Strengthen the risk restraint mechanism for financial institutions, major shareholders and actual controllers of listed companies. Strictly implement a hierarchical and differentiated information disclosure system for stock pledges. Strictly control the pledge of restricted shares. Support institutions such as banks, securities firms, insurance companies and private equity funds in participating in the resolution of stock pledge risks of listed companies. (Responsible by the China Securities Regulatory Commission, the Supreme People's Court, the People's Bank of China, the China Banking and Insurance Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council and other units, as well as the provincial people's governments)
(10) Seriously deal with issues of fund occupation and illegal guarantees. The controlling shareholder, actual controller and related parties shall not in any way encroach upon the interests of the listed company. Adhere to law-based supervision and classified handling. For the problems of fund occupation and illegal guarantee that have already formed, they should be settled or resolved within a prescribed time limit. For issues of fund occupation and illegal guarantee that have not been rectified within the prescribed time limit or have newly occurred, strict investigations and punishments should be carried out. If a crime is constituted, criminal responsibility shall be pursued in accordance with the law. It is determined in accordance with laws and regulations that listed companies shall not bear guarantee liability for non-compliant guarantee contracts. Where a listed company undergoes bankruptcy reorganization, it shall propose practical and feasible solutions to the problems of fund occupation and illegal guarantees. (Responsible by the China Securities Regulatory Commission, the Supreme People's Court, the Ministry of Public Security and other units, as well as the provincial people's governments)
(11) Strengthen policy support for responding to major emergencies. In the event of major emergencies such as natural disasters or public health incidents that have a serious impact on the normal production and operation of listed companies, the securities regulatory authorities shall make flexible arrangements under the premise of compliance with laws and regulations. Relevant departments should rely on coordination mechanisms such as macro policies and financial stability, enhance collaboration and interaction, and effectively implement policies in areas such as industry, finance, and taxation. All levels of government should promptly take measures to maintain the supply of labor, production materials, public utilities and logistics transportation channels, and support listed companies in resuming normal production and operation as soon as possible. (Responsible by the National Development and Reform Commission, the Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Commerce, the State Taxation Administration, the People's Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and other units, as well as the provincial people's governments)
Six. Increase the cost of illegal and irregular activities for listed companies and related entities
(12) Intensify law enforcement efforts. Strictly implement the provisions of the Securities Law and other laws, and increase the penalties for illegal and irregular behaviors such as fraudulent issuance, illegal information disclosure, market manipulation, and insider trading. Strengthen the collaboration between administrative and judicial organs to achieve rapid transfer and prompt investigation of criminal cases, and severely punish illegal and criminal acts. Improve the rules for identifying illegal and non-compliant behaviors. When handling cases of illegal and non-compliant behaviors of listed companies, pay attention to distinguishing the responsibilities of listed companies, shareholders, and individuals such as directors, supervisors, and senior management personnel. All securities companies, securities service institutions and other intermediary agencies and their practitioners involved in the case shall be investigated and dealt with together. Where the circumstances are serious and the nature is bad, measures such as suspension, revocation or revocation of business or professional qualifications shall be taken in accordance with the law. (Responsible by the China Securities Regulatory Commission, the Ministry of Public Security, the Supreme People's Court, the Ministry of Finance, the Ministry of Justice and other units, as well as the provincial people's governments)
(13) Promote an increase in legal supply. Promote the revision of relevant laws and regulations, increase the administrative and criminal legal responsibilities for illegal and irregular acts such as financial fraud and fund occupation, improve the civil litigation and compensation system for securities, and significantly raise the cost of illegal and irregular activities for the relevant responsible entities. Support investor protection institutions in participating in litigation as representatives in accordance with the law. Promote the model judgment mechanism for securities and futures disputes. (Responsible by the China Securities Regulatory Commission, the Supreme People's Court, the Ministry of Justice, the Ministry of Public Security, the Ministry of Finance and other units)
Vii. Form a working synergy to improve the quality of listed companies
(14) Continuously enhance regulatory efficiency. Adhere to the direction of serving the real economy and protecting the legitimate rights and interests of investors, and take improving the quality of listed companies as an important goal of listed company supervision. Strengthen prudent supervision throughout the process, promote scientific, classified, professional and continuous supervision, and enhance the effectiveness of supervision over listed companies. Give full play to the front-line supervision and self-regulatory management responsibilities of the stock exchange and the self-regulatory management role of the listed companies association. (Responsible by the China Securities Regulatory Commission
(15) Strengthen the primary responsibility of listed companies. Listed companies should be honest and trustworthy, operate in a standardized manner, focus on their main business, operate steadily, and constantly improve their operational level and development quality. The controlling shareholders, actual controllers, directors, supervisors and senior management personnel of listed companies should each fulfill their duties and treat all shareholders fairly. For acts that harm the interests of listed companies, listed companies should protect their rights and interests in accordance with the law. Encourage listed companies to return returns to investors through cash dividends, share repurchases and other means, and earnestly fulfill their social responsibilities. (Responsible by the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the Ministry of Finance, the All-China Federation of Industry and Commerce and other units)
(16) Urge intermediary agencies to fulfill their duties and responsibilities. Improve the professional rules system for intermediary institutions, clarify the boundaries of responsibilities between listed companies and various intermediary institutions, and hold intermediary institutions accountable. Relevant intermediary institutions should strictly fulfill their legal duties such as verification and professional screening to provide high-quality services for listed companies. Relevant departments and institutions should cooperate with intermediary agencies to perform their duties in accordance with laws and regulations, and provide relevant information in a timely, accurate and complete manner. (Responsible by the China Securities Regulatory Commission, the Ministry of Finance, the Ministry of Justice, the China Banking and Insurance Regulatory Commission and other units, as well as the provincial people's governments)
(17) Pool the efforts of all parties. Improve the comprehensive regulatory system for listed companies, promote the construction of a big data platform for the supervision of listed companies, and establish and improve an information sharing mechanism among units such as finance, taxation, customs, finance, market supervision, industry supervision, local governments, and judicial authorities. Increase institutional supply, optimize the policy environment, enhance regulatory and law enforcement collaboration, and jointly handle risks of listed companies. Give full play to the role of news media in guiding public opinion and supervision, and jointly create a favorable environment that supports the high-quality development of listed companies. (Responsible by all relevant units and provincial people's governments)
State Council
October 5, 2020