Gem Annual Report Needs To Disclose The Trend Of Executive Shareholding In Detail.

The CSRC issued a notice on December 31, 2010, requiring all listed companies and relevant accounting firms to do well.

Compared with the disclosure requirements of the annual report in 2009, the SFC strengthened the attention of the listed companies on interbank competition, related party pactions, insider trading, suspending and terminating the listing risks and other issues.

The SFC requires the listed companies to be sound and effective in implementing the internal control system, disclosing the establishment and operation of the internal control system of the company's financial reporting in the annual report, establishing the basis for internal control of the financial report, and finding out the specific defects in the internal control of the financial report during the year. It requires the listed companies to solve the problems of inter industry competition, reduce related party pactions, enhance independence, and whether there is competition and related paction problems in part of the disclosure because of partial restructuring. If there is still need to disclose corresponding solutions and follow-up work plans, it is required to strengthen the regulation of the capital pactions between the parties concerned, disclose the related pactions and the related debt pactions truthfully, and at the same time improve the control system and accountability mechanism of major capital exchanges.

On the basis of strengthening the disclosure of insider information management system in the 2009 annual report, the SFC further requested the listed companies to strictly enforce insider information management system and prohibit insider trading. In the course of the disclosure of the annual report in 2010, the SFC partially disclosed the implementation of insider information management system, and the insider information insider of the company used insider information to buy and sell shares of the company before the major sensitive information disclosure affecting the company's share price this year, as well as the investigation and rectification of the regulatory authorities.

As for the GEM listed companies, besides the original requirements of "fully disclosing their core values, risks and the use of funds raised", the SFC also stressed the warning of delisting risks, and at the same time required GEM companies to strengthen disclosure of the number of executives, the period of restriction and their reduction.

For the accounting firms engaged in the audit of annual reports, the announcement emphasized the concept of "strengthening risk oriented" auditing. The specific requirements include: accounting firms should strengthen their professional ethics and independent management, establish the registration and filing system for business personnel to hold stocks, and improve relevant procedures for the first undertaking or renewal of contracts, and risk assessment and other related systems. They should not undertake business in an unfair way such as lowering prices. The audit of annual reports should be carefully deployed in 2010. When appointing key management personnel in the project group, we should give full consideration to their professional competence, independence and time arrangement. We should strictly implement the risk oriented auditing concept and practice cautiously. We should strengthen project quality control, improve and perfect the review system, and strengthen the integrated management of general and branch offices.

According to the announcement, in 2011, the regulatory authorities will, in the field inspection of accounting firms, combine the analysis results of the annual report in 2010 to focus on the audit implementation, the independence of employees and the quality of audit that may result from low price competition in the annual report.