China Securities Regulatory Commission, Several Opinions on Reforming, Improving and Strictly Implementing the System for Delisting Listed Companies (Draft for Comments)

Issued: July 4 2014

Main contents: The Draft enumerates seven circumstances under which voluntary delisting is triggered by a takeover, buyback, merger by absorption or other market activities. With respect to the special character of voluntary delisting, it sets forth specific arrangements in respect of the implementation procedure, follow-up arrangements, etc. that differ from those for mandatory delisting, including requiring a super majority vote of the shareholders' general meeting for adoption, engagement of an independent financial advisor to provide professional opinions, requiring the independent directors to state their opinions, etc. Externally, the Opinions require the submission of a delisting application to, and the consent of, the stock exchange, so as to guard against possible improper acts committed in the course of voluntary delisting that harm the interests of small and medium shareholders. With respect to violations of the law in respect of which the market reacts strongly, such as fraud and violation of the law involving the disclosure of material information, a system of mandatory delisting of companies that commit material violations of the law is implemented.