Third Draft of the Amendment to Securities Law: Delisting Made Easier?

The PRC Securities Law (Draft for Amendments) (Draft for Third Reading) (Third Draft) (中华人民共和国证券法 (修订草案) (三次审议稿)) was published on the National People's Congress' website and opened for public comments on April 27, 2019.  It has been four years since the first review of the amendment to the securities law in April 2015.  There are many highlights in the Third Draft compared to the Second Draft (which was made on April 26, 2017), such as: the incorporation of the rules for the Science and Technology Innovation Board (STIB) registration system; more advantages for the employee stock ownership plan; offering of micro-financing and crowd funding issuance; and provisions made for the relevant rules for depository receipts and securities dispute mediation.  Of more significance is that the listing suspension system under the current Securities law has been abolished by the Third Draft; this is conducive to the long-term, healthy and sustainable development of the A-share market.  According to Article 56 of the Third Draft, in cases where listed securities no longer meet the relevant listing requirements, or there are other circumstances stipulated by the listing rules, the stock exchange will directly delist the securities according to the operating rules.  The abolition of the listing suspension system in the Third Draft will reduce time and improve the efficiency of delisting.