SSE Releases Guidelines No. 9 of the Shanghai Stock Exchange
On August 4, 2023, under the guidance of the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE) revised and released the Guidelines No. 9 of the Shanghai Stock Exchange for Self-regulation of Listed Companies — Evaluation of Information Disclosure Work (Revised in August 2023) (hereinafter referred to as the Guidelines), which came into effect immediately upon publication. The revised Guidelines apply to companies listed on the main board and the STAR Market. This revision of the Guidelines is a concrete measure taken by the SSE to implement the CSRC's three-year action plan for enhancing the quality of listed companies and continuously improve investors' sense of gain and satisfaction.
Listed companies are the cornerstone of the capital market, and high-quality listed companies are the foundation for an active capital market and boosts investor confidence. The quality of information disclosure reflects the quality of listed companies and is the main basis for investors' decision-making. The SSE attaches great importance to the quality of listed companies' information disclosure and has been evaluating the annual information disclosure work of listed companies since 2013. It has been urging the listed companies to strictly abide by the bottom line of information disclosure compliance and advocating the establishment of best practices in information disclosure so as to promote an information disclosure approach that meets the needs of investors. With the full implementation of the registration-based IPO system, the importance of information disclosure by listed companies has become increasingly prominent, requiring stricter requirements and higher standards to guide high-quality information disclosure by listed companies. This revision of the Guidelines by the SSE focuses on enhancing the scientific nature of evaluation indicators, improving the relevance of rules, and strengthening the application of evaluation results, aiming to establish a long-term mechanism to improve the quality of information disclosure.
I.Striving to prevent fraud from the source. The Guidelines emphasize creating an atmosphere of severe punishment for violations. The "one vote veto" negative list for listed companies' information disclosure work is further enriched, reflecting a clear orientation towards severe punishment for violations such as financial fraud, fund misappropriation, and unauthorized guarantees. The evaluation weightage for standardized operation and honest business practices of listed companies is increased, and scoring rules for significant negative issues are added. In cases where the interests of investors may be harmed, the investor decision-making may be misled by the information disclosure, or business operations may be under potential risks, evaluation scores will be substantially deducted, resulting in lowered evaluation results.
II.Comprehensively implementing the principle of categorized supervision. The Guidelines make further explorations in deepening categorized supervision. On the one hand, it strengthens service support for companies with excellent evaluation results (Category A), granting them more discretion in information disclosure and, in principle, exempting their temporary announcements from ex post review. Furthermore, closer associations with merger and restructuring reviews, as well as refinancing reviews, are established. On the other hand, it reinforces supervision and regulation for companies with low evaluation results (Category D), suspends their use of the express lane for information disclosure, intensifies ongoing and ex post supervision, and strengthens compliance training to guide companies and key stakeholders.
III.Comprehensively reflecting the orientation towards serving investors. The Guidelines prioritize meeting investors’ information needs. It actively guides listed companies to take effective measures to enhance investors' sense of gain and satisfaction. For example, additional bonus points are given for concise and clear announcement content, regular performance briefings, improved readability and usefulness of periodic reports through innovative forms such as graphics, images, and videos, and multidimensional investor relations management. Also, it emphasizes the role of information disclosure evaluation in promoting regular dividend distribution by listed companies.
IV.Encouraging listed companies to fulfill their social responsibilities. The Guidelines incorporate the disclosure of listed companies' fulfillment of social responsibilities into the evaluation scope. It strongly encourages listed companies to implement the new development philosophy in a complete, accurate, and comprehensive manner, actively integrate into major national strategies, and fulfill social responsibilities, aiming to promote the formation of a community of listed companies that emphasize returns, take responsibility, and earn respect.
Moving forward, the SSE will solidly promote the evaluation of listed companies' information disclosure work in the 2022-2023 period in accordance with the newly revised Guidelines, and continuously improve the quality of listed companies' information disclosure to a new level.