The State Council recently issued the "Opinions of the State Council on Further Improving the Quality of Listed Companies" (hereinafter referred to as the "Opinions"), and proposed 17 key measures to strengthen supervision of listed companies in 6 areas.

The "Opinions" pointed out that it is necessary to strengthen the construction of the basic system of the capital market and vigorously improve the quality of listed companies. Adhere to the equal emphasis on stock and increment, the combination of symptom and root cause, exert the joint efforts of all parties, strengthen continuous supervision, optimize the structure and development environment of listed companies, and significantly improve the standardization of listed company operations, continuous improvement of the quality of information disclosure, and effective solutions to outstanding problems. The sustainable development capability and overall quality have been significantly improved, providing strong support for the construction of a standardized, transparent, open, dynamic and resilient capital market and the promotion of high-quality economic development. The promulgation of this "Opinion" indicates that the country has entered a new stage in improving the quality of listed companies.

Key 1: Improve the governance level of listed companies

According to the "Opinions", improve the corporate governance system and rules, clarify the responsibilities and legal responsibilities of controlling shareholders, actual controllers, directors, supervisors, and senior managers. Improve the channels and methods for institutional investors to participate in corporate governance. Strengthen the bottom-line requirements of listed company governance, advocate best practices, strengthen the disclosure of governance information, and promote the improvement of the scientific nature of decision-making management. Carry out special actions for corporate governance, and effectively improve the level of corporate governance through company self-inspection, on-site inspections, and supervision of rectification. It is understood that in the next step, the China Securities Regulatory Commission will consider strengthening corporate governance as an important task at present and in the future, including improving listed company governance rules, strengthening listed company governance bottom-line requirements, advocating listed company governance best practices, and strengthening corporate governance information Disclosure etc.

Key 2: Promote listed companies to become better and stronger

According to the "Opinions", the securities issuance registration system shall be fully implemented and step-by-step implemented, support the listing of high-quality companies, improve the asset restructuring, acquisition and spin-off and listing systems of listed companies, and allow more qualified foreign investors to make strategic investments in listed companies. Strengthen the coordination and balance between the financing end and the investment end of the capital market to attract more medium and long-term funds into the market. Improve the incentive and restraint mechanism of listed companies.

Improve systems for asset reorganization, acquisition, spin-off, and refinancing. Since the beginning of this year, the China Securities Regulatory Commission has successively issued the "Decision on Amending the Measures for the Administration of Securities Issuance of Listed Companies" and "Decision on Amending the Measures for the Administration of Major Asset Reorganizations of Listed Companies" and so on. Regarding the "Opinions" that allows more qualified foreign investors to make strategic investments in listed companies, industry insiders said that specific implementation opinions are still needed.

Key 3: Improve the exit mechanism of listed companies

According to the "Opinions", we will improve delisting standards, simplify delisting procedures, strictly supervise, severely crack down on delisting behaviors, maliciously avoid delisting behavior, and increase accountability for violations of laws and regulations. Unblock diversified exit channels such as active delisting, mergers and reorganization, bankruptcy and reorganization. Relevant regions and departments should comprehensively implement policies to facilitate the clearing of risks.

The "Opinions" will help speed up the improvement of the exit ecology and solve the problem of "zombie" and "shell" companies staying in the capital market for a long time. The next step is to strike while the iron is hot, further improve the merger and reorganization, bankruptcy reorganization system, and promote the exit of listed companies through multiple channels. At the same time, strengthen the delisting notification system, strengthen information sharing and supervision cooperation with local governments and other relevant parties, and effectively prevent and restrain all kinds of resistance that may be encountered in the process of delisting. In addition, the supervision of delisting should be further strengthened, and acts of evading delisting through financial fraud, profit transfer, market manipulation and other illegal and illegal means should be severely cracked down and resolutely cleared.