China Securities Regulatory Commission (CSRC) in Beijing Photo:VCG

 
The number of companies delisting from the A-share market will not significantly increase as China's new delisting rules set a transitional period, China's top securities regulator said on Thursday in a statement, noting that it highly values protection for investors caught up in the delisting process while supporting investors to safeguard their own rights through legal measures. 

A total of 99 Chinese stocks listed on Shanghai and Shenzhen stock exchanges have been identified with ST (special treatment) companies, including 44 ST companies and 55 shares carrying a *ST tag. The number has not changed significantly in 2024 compared with previous years, Guo Ruiming, head of the China Securities Regulatory Commission (CSRC) Department of Listed Company Supervision, said in the Thursday statement, responding to a question regarding whether companies recently tagged with ST label will be forcibly delisted. 

The ST system aims to fully alert investors to the risks associated with listed companies, and companies meeting certain conditions can apply for a withdrawal of the tag. ST stands for "other risks warning," as ST companies will not be directly delisted and investors have been reminded of associated risks through different means, while a *ST tag means "delisting risk warning," according to the statement. 

According to market rules, stocks with major issues such as substandard financial data will be tagged with either of the above-mentioned ST tags after the annual disclosure on April 30. The major change for 2024 is that companies being administratively punished for financial counterfeiting but have not met the criteria for delisting in case of major violations will be subject tagged with ST following the implementation of new listing rules at the end of April this year. 

Guo stressed that CSRC attaches great importance to the protection of investors involved in the delisting process, and will strictly regulate major violations and protect investors' rights through multiple channels. 

The CSRC's move came following the continuous fall of small-cap stocks, with nearly 4,800 small-cap stocks falling and nearly 200 stocks plummeting by more than 9 percent on Thursday. 

Guo's remarks will help stabilize the market confidence and reassure investors that the CSRC will handle violations in accordance with the law rather than targeting small-cap stocks, Xi Junyang, a professor from the Shanghai University of Finance and Economics, told the Global Times on Thursday.

Xi said that investors may have relatively more concerns linked to small-cap stocks for violating regulations than worrying about large-size companies, especially following the CSRC's enhanced regulatory efforts in handling violations related to information disclosure and financial counterfeiting. The sentiment has led to a price drop in small-cap stocks, which may further affect the whole stock market, Xi noted. 

The CSRC has been stepping up regulation efforts following the implementation of a range of targeted policies. In its latest move, the CSRC said that it fined Evergrande Group 4.175 billion yuan ($576.06 million) for fraudulent bond issuance and information disclosure violations, while imposing a lifetime ban on Hui Ka Yan, also known as Xu Jiayin, the founder of the real estate developer, from the securities market together with a fine of 47 million yuan. 

Global Times