The Guidelines for the Application of Regulatory Rules - Issuance Category No. 10 is a further refinement of the information disclosure requirements of the Standards for the Contents and Forms of Information Disclosure by Companies that Offer Securities to the Public No. 57 - Prospectus.
Recently, the CSRC issued the Guidelines for the Application of Regulatory Rules - Issuance No. 10, of which the second item is of great concern. The content is "information disclosure requirements for commitments related to performance decline", that is, the issuer's controlling shareholders, actual controllers and their persons acting in concert can promise to extend the lock up period of shares held by the issuer at that time if the issuer's net profit attributable to the parent declines by more than 50% in the year of listing and the second and third years after deducting non recurring profits and losses compared with the year before listing.
The Guidelines for the Application of Regulatory Rules - Issuance No. 10 is a further refinement of the information disclosure requirements of the Standards for the Contents and Forms of Information Disclosure by Companies that Offer Securities to the Public No. 57 - Prospectus. Therefore, the Guidelines for the Application of Regulatory Rules - Issuance No. 10 requires the controlling shareholders, actual controllers and persons acting in concert of the issuer to make the above commitments, This actually requires the issuer to make the above commitments in the Prospectus, which will be one of the important contents of the Prospectus.
It is obviously necessary to make this commitment, which is actually an important supplement to the document "CSRC Further Regulates Share Reduction" issued by the CSRC on August 27 last year. According to the provisions of the CSRC Further Standardizing the Behavior of Share Reduction, if a listed company has an issue breaking or net breaking situation, or has not carried out cash dividends in the last three years, and the accumulated amount of cash dividends is less than 30% of the average annual net profit in the last three years, the controlling shareholders and actual controllers shall not reduce their shares through the secondary market. However, there is obviously a major loophole in this provision, that is, when the performance of listed companies changes face, it does not limit the holding reduction behavior of controlling shareholders.
In fact, when the performance of a listed company changes face, the holding reduction behavior of the controlling shareholders and others seriously damages the interests of public investors, especially small and medium-sized investors. In fact, it is the controlling shareholders and others who pass on the risk of the performance change of the listed company to the public investors, especially small and medium-sized investors. Therefore, in order to protect the interests of small and medium-sized investors, it is necessary to restrict or even prohibit the holding reduction of controlling shareholders when the performance of listed companies has changed.
Therefore, the Guidelines for the Application of Regulatory Rules - Issuance No. 10 requires the controlling shareholders, actual controllers and their concerted parties of the issuer to make a commitment to extend the lock up period of the shares held by the issuer at that time when the issuer's net profits attributable to the parent company in the year of listing and the second and third years after the listing decrease by more than 50% compared with the year before the listing after deducting non recurring profits and losses. This is obviously a supplement to the document "CSRC Further Regulates Share Reduction Behavior", which makes shareholders' share reduction behavior more perfect. In this case, controlling shareholders and others cannot reduce their shares not only in the case of breaking the hair and breaking the net, but also in the case of performance deterioration, because of the constraint of commitment. Therefore, this commitment is very meaningful. It is conducive to further regulating shareholders' shareholding reduction behavior, and it is also conducive to maintaining the interests of small and medium-sized investors.
In fact, it is precisely because of the significance of this commitment, so in order to further regulate the shareholders' shareholding reduction behavior, I suggest that the content of this commitment can be institutionalized and fixed as a system. After all, compared with the commitment, the system is more mandatory and binding, and the decision of the commitment lies with the parties (such as the controlling shareholders).
Moreover, as a party to the commitment, it should not be limited to the controlling shareholders, actual controllers and persons acting in concert of the issuer. In fact, all shareholders holding limited shares should become parties to the commitment when the IPO is first listed. To regulate shareholders' shareholding reduction behavior, it is not only the controlling shareholders' shareholding reduction behavior that should be standardized, but also the shareholding reduction behavior of shareholders holding limited shares. The most important of these is that some major shareholders with relatively large shareholding and senior important shareholders of the company's directors and supervisors should standardize some shareholding reduction regulations of controlling shareholders, which also apply to these important shareholders.
In addition, the provision of extending the lock period for performance deterioration cannot be limited to the first three years after the listing of a new company. In fact, at any time when the performance of a listed company deteriorates, it is necessary to call off the shareholding reduction of important shareholders. If the performance of a listed company does not improve, the shareholding reduction of important shareholders cannot be started. After all, at any time, when the performance of a listed company changes face, the reduction of important shareholders is a damage to the interests of public investors. Therefore, in order to maintain the interests of public investors, this reduction must be stopped.
(The author of this article introduces that a financial commentator, who has honed his unique vision and opinion on the stock market through 20 years of stock market training, has written the book "Easily speculate in stocks".)
