Regulator to fully implement registration

China's securities regulator revealed a plan to push forward full implementation of the registration system in the stock market and its ongoing efforts to optimize regulatory mechanisms.

Sun Nianrui, vice director of the department of listed company supervision at the China Securities Regulatory Commission, told a forum on high-quality development of listed enterprises on Thursday: "With the successful reform of the registration system on the SSE STAR Market and the ChiNext board, the third step of the reform will be steadily pushed forward — to apply the registration system to all boards of China's stock market."

Under the system, the efficiency of enterprises going public has been obviously improved, and so has the overall quality of listed companies, he said.

The follow-up reform will continue to adhere to promoting all parties to do their due diligence, and improve the quality of information disclosure and the standardization level of stock issuers through a market-oriented and rule-by-law approach, Sun said.

Meanwhile, in the next step, the CSRC will open up diversified exit channels, and support listed companies in revitalizing stock assets and clearing non-performing assets through ways that include actively delisting, mergers and acquisitions, and bankruptcy and reorganization, so as to achieve survival of the fittest and "metabolism" in the markets.

Sun said that, since 2019, the commission has taken improving the delisting system as an important part of deepening the reform of capital market, and has achieved remarkable results. 

As for monitoring and regulatory enforcement, the CSRC will implement the “zero tolerance” requirement and crack down on violations of the law, Sun said.

This year, the State Council’s Finance Committee has held five meetings, stressing the importance of cracking down on financial fraud and other illegal and irregular acts, and the CSRC has investigated and dealt with a number of high-profile cases that had a bad influence on the market, such as those involving Kangmei Pharmaceutical, Zhangzidao Group and Kangde Xin Composite Material Group, he said.

In view of the characteristics of law enforcement cases in recent years, more and more law enforcement resources have been used by the commission to investigate and deal with cases of financial fraud and embezzlement of guaranty. 

In addition, after the implementation of the new Securities Law in March this year, the liability for violating the law has been substantially increased, and the maximum fine has been raised from 600,000 yuan to 20 million yuan (US$3 million). The revision of the Criminal Law will also increase penalties for the crime of fraudulent issuance and illegal disclosure of information, and strengthen the liability of “key minorities” such as controlling shareholders and actual controllers. 

"In the next step, the CSRC will join hands with other authorities to make good use of adequate legal provisions, increase administrative law enforcement efforts, optimize civil litigation and compensation systems, and form a multi-dimensional accountability system, with which the cost of violation of laws and regulations will be greatly increased," Sun said.

He also said the commission was working on revising the Measures for the Administration of Equity Incentives of Listed Companies.