Twenty-two government bodies on Dec 28 released a memorandum of understanding on punishing illegal and dishonest listed companies.
They include the China Securities Regulatory Commission, the National Development and Reform Commission, the China Banking Regulatory Commission, the China Insurance Regulatory Commission, the State Administration of Foreign Exchange and the General Administration of Customs.
The punishments target listed companies, the companies’ directors, supervisors and management teams as well as controlling shareholders.
The CSRC will handle illegal and dishonest cases in strict accordance with the laws and regulations and make decisions on administrative penalties and barring market entry. All the decisions will be released on a national credit information sharing and exchange platform.
There are 16 punishments, including restricting such firms from issuing corporate bonds and ones on the interbank market, as well as participating in government procurement and receiving subsidies.
Dishonest information will also be considered when setting up commercial banks’ branches and securities, fund management and insurance companies, and approving and managing qualified foreign institutional investors and RMB QFII quotas.
No specific companies were named at the conference or in the accompanying statement provided to reporters.
“The statement is also good for listed companies because we will pay more attention to credit management,” said Mo Yang, assistant president of Sanhua Holding Group, parent company of Zhejiang Sanhua Co Ltd.
On Dec 27, the country’s top legislature authorized the State Council to roll out the new IPO mechanism before completing the amendment of the Securities Law.
A statement from the CSRC on Sunday said that the legislative approval of launching the registration-based IPO system was a significant development in the Chinese capital market and encouraged market forces to determine the allocation of resources.
The registration-based IPO system will pay more attention to information disclosure rather than corporate prospects and investment value.
The commission said it will also draw up supporting rules and take other measures to ensure the registration-based IPO system proceeds smoothly.
“The legal obstacles have been removed, and the registration-based IPO system is in the implementation stage,” said Li Daxiao, chief economist at Yingda Securities Co Ltd.