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China to raise quality of listed firms

Updated: Oct 13,2020 12:23 PM

A State Council policy briefing was held on Oct 12, where senior officials elaborated on a guideline to foster high-quality development of listed companies.

The guideline, released on Oct 9, detailed 17 sets of measures to improve corporate governance and development of mainland-listed firms and required cooperation among different authorities.

The high-level guideline encouraged cross-border investment engaging listed companies, pledging to support them to issue new shares to acquire overseas assets and allow more foreign investors to make strategic investments in mainland-listed firms. Strategic investment usually entails long and large shareholding.

Yan Qingmin, vice-chairman of the China Securities Regulatory Commission, said the top securities watchdog will prioritize raising listed firms’ quality in its capital market reform efforts, under instructions from the guideline.

"The guideline is of great significance for promoting the steady and healthy development of the capital market and boosting its support for high-quality growth of the real economy," Yan said at a news conference on Oct 12.

The commission will revise regulations to ease the threshold of foreign strategic investments and facilitate listed firms' overseas acquisitions, as part of its efforts to strengthen the competitiveness of listed firms and deepen capital market opening-up, said Li Ming, director of CSRC's Department of Listed Company Supervision.

The value of overseas mergers and acquisitions by mainland-listed firms since 2018 reached 465.9 billion yuan ($69 billion), he said, while foreign strategic investors now hold 1.35 trillion yuan in mainland stocks.

Xie Xiaobing, an official from the State-owned Assets Supervision and Administration Commission of the State Council, told the conference that SASAC will cooperate with other authorities to improve cooperative governance of State-owned listed firms, introducing more strategic investors into State-owned public companies and allowing them to hold higher stakes.

The guideline also detailed measures to refine information disclosures, corporate governance standards, support quality firms to get listed, and carry out mergers and acquisitions, improve delisting and other exit mechanisms for listed firms, resolve key problems facing listed firms such as share-pledging risks, and intensify crackdowns on securities violations.

The registration-based system, a market-oriented, new shares system, should be implemented across the whole A-share market in an orderly manner, the guideline said.