Get rid of the zombies and empty shells the Securities Regulatory Commission is brewing the delisting reform of the composite index

category:Finance
 Get rid of the zombies and empty shells the Securities Regulatory Commission is brewing the delisting reform of the composite index


At present, the registration system reform has been smoothly implemented in the science and technology innovation board and the growth enterprise market, and will be implemented in the whole market. At the same time, the capital market reform has gradually entered the critical stage, improving the quality of listed companies has become the ultimate common direction of all kinds of reform. Besides the reform of registration system, the other half of the answer to improve the quality of listed companies is to stimulate the effectiveness of delisting system and smooth the export of capital market.

Judging from the latest concept of delisting, it is consistent with the concept of registration system. The simplified delisting channels and diversified delisting standards can better meet the needs of the registration system. Dong Dengxin, director of Financial Securities Research Institute of Wuhan University of science and technology, told ifnancial that diversified IPO standards should correspond to diversified delisting standards, while under the registration system, the goal should be to eliminate zombies and empty shells.

Reform starts again

This round of registration system reform has gone through seven years since the end of 2013. The first half focuses on improving the legal environment and preparing the conditions for reform; the second half focuses on the establishment of the science and technology innovation board and the reform of the growth enterprise market, and gradually promotes the registration system to the whole market.

The above-mentioned reform has promoted the quality improvement of listed companies from the aspects of listing entry and in-process supervision. However, for listed companies as a whole, clearing away the zombies and empty shells is another key stage to improve the quality of listed companies.

With the recent frequent statements of the regulatory authorities, we can see that the implementation of a new round of delisting system reform is gradually approaching.

On October 9, the State Council issued the opinions on further improving the quality of listed companies, pointing out that it is necessary to improve the exit mechanism of listed companies, strictly supervise delisting, improve delisting standards, and severely crack down on malicious evasion of delisting.

On October 31, the financial stability and Development Committee of the State Council held a special meeting to emphasize once again that the registration system for stock issuance should be fully implemented and a normal delisting mechanism should be established.

On November 2, the 16th meeting of the Central Committee for comprehensive deepening reform deliberated and approved the implementation plan for improving the delisting mechanism of listed companies. The plan pointed out that improving the delisting mechanism of listed companies and cracking down on illegal securities activities in accordance with the law are important institutional arrangements for comprehensively deepening the reform of the capital market.

On November 3, the proposal of the Central Committee of the Communist Party of China on formulating the 14th five year plan for national economic and social development and the long-term goal for the year 2035 put forward that the registration system for stock issuance should be fully implemented, a normalized delisting mechanism should be established, and the proportion of direct financing should be increased.

On November 10, China Securities Regulatory Commission (CSRC) held a mobilization and deployment meeting for implementation. It was proposed at the meeting that the exchange should earnestly assume the main responsibility, all dispatched agencies and local governments should strengthen cooperation, resolutely crack down on all kinds of malicious evasion delisting behaviors, and seriously deal with the behaviors of resisting supervision by means of inciting and harassing visits.

At the same time, the CSRC has made it clear that it is necessary to broaden diversified exit channels, fully mobilize the enthusiasm of relevant parties and local governments, focus on promoting the reorganization of a batch, restructuring a batch, and actively withdrawing a batch, so as to promote the orderly clearing of the risks of listed companies in stock.

According to first finance and economics, improving bankruptcy reorganization and other systems is also a direction for regulators to promote diversified delisting. In addition to delisting companies that trigger delisting indicators, they can also delist problematic assets to improve the quality of listed companies.

advance gradually and entrench oneself at every step

In the 19 years since then, the A-share market has grown from scratch to become an international leading market with more than 4000 listed companies and a total market value of more than 76 trillion yuan. But compared with the listed companies, the proportion of delisted companies is still very low.

In 2012, the Shanghai and Shenzhen stock exchanges started to improve the delisting system. Companies with negative net assets for three consecutive years, or operating income less than 10 million yuan for three consecutive years, or closing price lower than the par value of shares for 20 consecutive trading days, will be delisted.

In 2014, China Securities Regulatory Commission (CSRC) issued some opinions on reform, improvement and strict implementation of delisting system of listed companies, which is known as the strictest delisting new regulation in history, adding the compulsory delisting system for major illegal companies such as fraudulent issuance and illegal disclosure of major information.

In 2019, the science and technology innovation board pilot registration system, delisting system optimization. On the basis of compulsory delisting of major illegal categories, delisting of market indicators and financial indicators, compliance delisting indicators such as information disclosure or major defects in standardized operation shall be added; suspension of listing and resumption of listing procedures shall be cancelled, and no special re listing link shall be set.

In 2020, the new securities law will come into effect, and the suspension of listing will be abolished for the first time, and there will no longer be a resumption of listing game rules in the A-share market.

The science and technology innovation board and the growth enterprise market have made major reforms, abolishing the suspension of listing, resumption of listing and re listing. However, we should also strengthen the multiple financial delisting indicators and strengthen the efforts in this regard. Dong Dengxin said.

Multiple delisting

With the continuous optimization of delisting system, the delisting situation of A-share listed companies is changing. In the past two years, marketization and normalization of delisting are accelerating, diversified exit channels are increasingly unblocked, and the characteristics of survival of the fittest, entry and exit are beginning to show, and delisting of listed companies is increasing compared with before.

The first financial analysis found that the cases of forced delisting in A-share market mainly occurred in 2002, 2004, 2005 and 2019, with 7, 8, 10 and 10 listed companies being forced to delisting, while no company of a shares was forced to delisting from the market from 2008 to 2012.

In 2018, the first par value delisting stock in the A-share market, Zhonghong shares, was born. Since then, the number of stocks delisted due to investors voting with their feet has increased. 2019 is the year of the outbreak of delisting at par value. In 2019, Changsheng biology, the first major illegal delisting stock, also appeared.

According to first finance and economics, the delisting of a shares still faces two major problems: one is that the delisting process needs to be optimized, and the reorganization and restructuring channels need to be further unblocked; second, when listing is difficult, delisting resistance is huge. There are many stakeholders in listed companies, and companies, investors, local governments, competent authorities and even regulatory authorities are facing great pressure and lack of motivation to promote delisting. To solve these problems, we need to further improve the basic system of capital market based on the reform of registration system.

In Dong Dengxins view, the release of the portfolio delisting concept by the regulatory authorities is just another reform attempt to break the dilemma of delisting.

He believes that combined financial indicators can be understood as multiple financial indicators. For example, when a listed companys multiple financial indicators decline, its main business shrinks sharply, the companys debt is huge, and its employees continue to leave their jobs, even if the company keeps making profits by selling off its assets, it can not rule out that it is a zombie or shell enterprise.

So, how to judge whether an enterprise is zombie or empty shell?

Dong Dengxin proposed: first, to see whether the operating income is too low, because most shell enterprises have low or even zero operating income; second, to see whether the net assets are negative. When the net assets are negative, theoretically, they have entered the bankruptcy channel; third, whether the undistributed profits are negative. When the undistributed profits are negative, it means that the accumulated losses have accumulated to a certain scale; fourth, to look at stocks If the market value of RMB 1 is too low, it means that the investors voting value is too low. All of these can be used as multiple delisting criteria. If one of them is met, it can be delisted. Dong Dengxin believes that in order to make the delisting system work, the most important thing is to strengthen the supervision of information disclosure, especially the supervision of financial data, so that fraud can be completely curbed. Source of this article: Guo Chenqi, editor in charge of first finance and Economics_ NBJ9931

Dong Dengxin proposed: first, to see whether the operating income is too low, because most shell enterprises have low or even zero operating income; second, to see whether the net assets are negative. When the net assets are negative, theoretically, they have entered the bankruptcy channel; third, whether the undistributed profits are negative. When the undistributed profits are negative, it means that the accumulated losses have accumulated to a certain scale; fourth, to look at stocks If the market value of RMB 1 is too low, it means that the investors voting value is too low.

All of these can be used as multiple delisting criteria. If one of them is met, it can be delisted. Dong Dengxin believes that in order to make the delisting system work, the most important thing is to strengthen the supervision of information disclosure, especially the supervision of financial data, so that fraud can be completely curbed.