Exchanges to strengthen information disclosure

The Shanghai and Shenzhen stock exchanges have committed themselves to implementing new regulations covering shareholder information disclosure of companies to be listed.

The China Securities Regulatory Commission, the country’s top regulator of the securities industry, issued guidelines last Friday for shareholder information disclosure of companies applying for initial public offerings, and the two major bourses on the mainland then clarified the measures they would take in detail late on Sunday.

They will strictly forbid investors from hiding behind the nominal shareholders of enterprises to be listed through such means as proxy holding of shares and indirect holding of shares by multi-layer nested institutional shareholders. These are acts aimed at acquiring shares at a low price when enterprises are about to be listed thus profiting from a public offering.

The newly declared enterprises on the STAR Market and Shenzhen’s ChiNext Board shall, when applying, clear up their share holding, disclose shareholders’ information and submit special commitments, according to law and regulations.

Within 12 months before the declaration, new shareholders shall undertake that the shares they hold cannot be transferred within 36 months from the date of acquisition, and the issuer should urge the implementation thereof.

Exchanges will carry out stricter inquiries, pay attention to the issues of disclosure and verification of shareholders’ information, sort the situations of enterprises before handling, and issue additional inquiries in a targeted manner.

More focus will be put on the information disclosure and verification of individual shareholders and institutional shareholders with multi-layer nesting whose share prices are obviously abnormal, according to the exchanges.