Shanghai Stock Exchange, Questions Relevant to Amending Part Ten of the Share Listing Rules and Arising from the Implementation Thereof Circular

Issued: February 25 2002
Effective: as of date of issue

Main contents: The revisions aim to achieve consistency with the provisions of the Suspension and Termination of the Listing of Loss-making Listed Companies Implementing Procedures (Revised) (the Implementing Procedures). If a listed company has had its listing suspended because it has operated at a loss for three consecutive years, it will be delisted unless it discloses its first six-month interim report within the required time limit and the report shows that the company is profitable (Rule 10.2.2). If other than as a result of non-State policy based retrospective adjustment to its financial report, the company is deemed to have operated at a loss for three consecutive years, the stock exchange will suspend trading of its shares (Rule 10.1.8). The specialist committee of the exchange shall review the resumption of listing applications and shall approve or reject such applications on the basis of the opinions of the listing committee (Rule 10.2.12). When a company applies for resumption of listing, it shall provide, among other things, a legal opinion from its lawyer and the verification opinion from its sponsor (Rules 10.2.9). The exchange may appoint an accounting firm to verify the profitability of the company where a non-standard unqualified audit opinion has been issued on the interim financial report of the company applying for resumption of listing (Rule 10.2.2). The revised rules also require the company to disclose additional information during the suspension period (Rules 10.1.5 and 10.2.3). The Circular also states that the exchange will not provide special transfer service for the shares of those companies that were suspended from listing after the issue of the Implementing Procedures.
Related legislation: Suspending and Terminating the Listings of Loss-making Listed Companies Implementing Procedures (Revised), Nov 30 2001, CLP 2001 No.10 p8; Compilation Rules for Information Disclosures by Companies That Offer Securities to the Public No.14