Today, the Shanghai Stock Exchange (SSE) issued four sets of guidelines for the formats of interim announcements, which are respectively applicable to four matters drawing much attention in the market, including the entrusted wealth management, the abnormal fluctuations in stock trading, the shareholding lessening by major shareholders and directors, supervisors and executives, the profit distribution of the listed companies, and the capitalization from capital public reserve. Specifically, the three sets of guidelines for entrusted wealth management, the abnormal fluctuations in stock trading, and the shareholding lessening by major shareholders and directors, supervisors and executives are revised on the basis of the original guidelines implemented for years by considering the new rules for asset management, the fact that some companies are keen on wealth management, the new circumstances of abnormal fluctuations, the developments in shareholding lessening, etc. and summarizing the experience in the earlier routine regulation. At the same time, in order to more effectively guide the listed companies in accurately disclosing the plans for profit distribution and capitalization from capital public reserve, a new set of format guidelines have been developed.
First of all, there are contents that are added or cancelled, with the focus on improving the quality of information disclosure.
In the adjustments to the guidelines for the announcement formats, there some contents are added while some are cancelled. With effective measures of "addition and subtraction", efforts have been made in improving the pertinence, effectiveness and accuracy of information disclosure by the listed companies, so as to better protect the right to know of small and medium-sized investors.
On one hand, the redundant information is reduced and the cost of information disclosure is decreased. The revision stipulates that the “actual investment amount” in the entrusted wealth management is the highest single-day balance during the period, so as to avoid the circumstance where a company has the criterion for information disclosure triggered due to the simple accumulation of each amount of wealth management occurring in a rolling manner when purchasing short-term rolling wealth management products, and guide the companies in reasonably presenting the actual situations of entrusted wealth management, so as not to cause misunderstandings in the market. In addition, it is stipulated that the major shareholders, directors, supervisors or executives, who reduce the shareholding at the same by multiple means such as auction, block trade and contractual transfer, only need to disclose the plans, progresses and results of the shareholding lessening by means of auction, so as to avoid frequent disclosures of the announcements on shareholding lessening leading to disturbances in the market. On the other hand, according to the SSE’s experience in regulation of information disclosure over years, the requirements for disclosing the announcements on entrusted wealth management and abnormal fluctuations are further rationalized, so as to provide strong regulatory support for the companies to disclose the announcements on profit distribution and capitalization from capital public reserve, improve the offer of rules and meet the demand for information disclosure in the market.
Secondly, the flows of wealth management funds are reasonably guided.
It is a common investment behavior for listed companies to use idle funds to purchase wealth management products, which is conducive to improving the efficiency of capital utilization. However, some companies failed to carefully assess the risks in the process of wealth management, and blindly pursued high profits of the wealth management products such as trusts and privately offered funds, resulting in the inability to recover the investment funds on time; a small number of companies invested the raised funds in the wealth management products for a long time, resulting in the funds circulating within the financial sector without entering the real economy, and caused doubts due to the suspected improper management. The revised guidelines for the formats of the announcements on the entrusted wealth management mend the loopholes in the aspect of information disclosure, so as to tighten the “fence” and see through the “investment targets”.
In the revision, the information disclosure requirements for the investment targets of the wealth management funds are newly added, so that the investors can judge the safety of the wealth management funds and the risk levels of the wealth management products based on the information, and the listed companies are urged to regulate their wealth management behaviors. At the same time, regarding the different situations of entrusted wealth management, including purchasing high-risk entrusted wealth management products characterized by low security and poor liquidity, purchasing the loan-oriented, trust and privately offered fund products of wealth management or project financing products, using the funds in the investment on the secondary market or participating in the refinancing of the listed companies, and getting involved in the complex products such as derivatives, etc., it is required that the users of the funds, the investment targets and other relevant circumstances should be further clarified. In addition, the companies are also required to analyze the specific impact of the purchase of wealth management products on production and operation. Through the comparative analysis of the corresponding financial indicators, the investors can more simply learn about the proportions of the company's payment of cash in the wealth management, and then rationally judge the company's operations in the main business.
Thirdly, the risk disclosure function of the announcements on abnormal fluctuations in trading is strengthened.
Whether the risk warning in the information disclosure is adequate is important for guiding the investors in making rational decisions and curbing market scalping. In practice, among the announcements on abnormal fluctuations in stock trading issued by the listed companies, there were quite a few that were similar to each other, disclosed redundant non-critical information, included little risk disclosure, “beat about the bush”, or were vague and evasive.
The revised format guidelines for announcements on abnormal fluctuations in stock trading urge the companies to fully verify and specify whether there is information that should be disclosed, or whether there are matters that the stock prices are sensitive to, including production and operation, major events, media reports, market rumors, hot concepts and so on. At the same time, the disclosure of risk warning is specially highlighted in the starter and main body of the announcement, so as to push the companies to disclose the hidden investment risks in the abnormal fluctuations in stock trading in the aspects such as trading risks in the secondary market, production and operation risks, media reports, market rumors, hot concepts-involved issues or risks for business uncertainty, risks for progress of major issues and industrial risks. The revised guidelines also require that the companies should at least warn against the trading risks in the secondary market after verifying that there are no relevant major issues, and remind the investors to make investment in a rational way.
Fourthly, the pertinence of the disclosure of the shareholding lessening behaviors by the major shareholders, directors, supervisors and executives is improved.
According to the requirements of the new rules for shareholding lessening, the major shareholders, directors, supervisors and executives, who reduce their shareholding through auction, should disclose their shareholding lessening plans 15 trading days ahead of schedule. In practice, among the major shareholders, directors, supervisors and executives who reduced their shareholding by the means other than auction such as block trade and contractual transfer, some disclosed the shareholding lessening plans in advance, but some disclosures were not clear enough, leading to unnecessary panic and misunderstandings in the secondary market. In accordance with the relevant requirements of the new rules for the reduction of shareholdings, the revised guidelines for formats of the announcements on plan / progress / results of shareholding lessening by shareholders, directors, supervisors and executives reiterate the pre-disclosure requirements for the shareholding lessening through auction while providing that it is not necessary to disclosure the plan for the shareholding lessening through other means.
Fifthly, the revision aims to meet the institutional demand in the practice of profit distribution and capitalization from capital public reserve.
Distribution of cash dividends is an important way for the listed companies to benefit the investors in return, and SSE has always attached importance to the situations of the cash dividends distributed by the listed companies. In practice, the listed companies disclosed the plans for different forms of profit distribution and capitalization from capital public reserve. Some disclosed the dividends based on the company's total share capital at the end of the year, but had to re-convene the shareholder meeting on modifying the plan when the share capital changed before the equity registration date, causing inconveniences to the subsequent operations in implementation. Some companies planned the dividend distribution in a proportion of less than 30%, but were vague about the relevant reasons.
In order to more effectively guide the listed companies in accurately disclosing the plans for profit distribution and capitalization from capital public reserve, and improve the regulatory services, the guidelines for the formats of the announcements on plans for the issues are newly added in the revision. The new guidelines stipulate that the profit distribution and the capitalization from capital public reserve should be based on the total share capital on the equity registration date, and guide the companies in determining the adjustment modes in advance in the plan, so that the board of directors can make adjustments according to the authorization of the shareholders' meeting when the company's share capital changes. At the same time, it is stressed that the reasons for the cash dividend proportion below 30% should be provided, and the decision-making procedure for a company's profit distribution is standardized.
According to an SSE official, in recent years, the SSE has attached great importance to the issues of concern to the market and investors, and has continuously consolidated the institutional foundation. The released guidelines for announcement formats have been formulated on the basis of summarizing the practices of the listed companies and the routine regulatory experience, and the fundamental goal is not to simply increase the contents of information disclosure, but to make both additions and cancellations, carry out optimization and improvement, enhance pertinence and effectiveness of information disclosure, and bring the due roles of the announcements in facilitating the decision-making for investment and risk disclosure into real play. In the long run, the revision is also an important effort in gradually improving the quality of information disclosure and cultivating a rational investment culture in the market. Going forward, the SSE will continue to track and analyze the use of the guidelines for the announcement formats, and make revision and improvement in a timely manner according to the demands in the market.