"Kangde" People Or Become The New Delisting Rules Of The Fish? Financial Fraud Forced Delisting Suspected To Be Too Loose

Following the approval of the implementation plan for improving the delisting mechanism of listed companies at the meeting of the Shenzhen Reform Commission of the Central Committee, Shanghai and Shenzhen stock exchanges began to solicit public opinions on a series of delisting rules on December 14. So far, the fifth delisting reform of domestic capital market began.

The 21st century economic reporter noted that the revision of the rules of the Shanghai and Shenzhen stock exchange can be divided into four types according to the delisting situations, namely, transaction, finance, regulation and major illegal delisting, as well as active delisting. The corresponding delisting implementation procedures are stipulated according to each category, and the indicators for the four types of compulsory delisting are improved.

However, some delisting rules in the public consultation version have caused market disputes, among which "major illegal" delisting indicators have the most different opinions.

"Kangde" forced delisting

"The delisting standards for major illegal categories) are quite loose, and it is easier for listed companies to make financial fraud." In the interview, a senior market person said frankly.

In addition to the original sub types of major illegal delisting, the draft issued by Shanghai and Shenzhen stock exchange further clarifies the criteria for determining financial fraud delisting.

The newly added contents include: according to the facts confirmed by the administrative punishment decision of the CSRC, there are false records, misleading statements or major omissions in the annual report disclosed by the company. The amount of false increase in net profit of listed companies for three consecutive years has exceeded 100% of the amount of net profit disclosed in the annual report of that year, and the total amount of false increase in net profit for three years has reached more than 1 billion yuan;

Or the total amount of false increase in profits for three consecutive years has exceeded 100% of the total amount of profits disclosed in the annual report of the current year, and the total amount of false increase in three years has reached more than 1 billion yuan;

Or the total amount of false records in each subject of the balance sheet for three consecutive years exceeds 50% of the net assets disclosed in the annual report of that year, and the total amount of false records in the three years has reached more than 1 billion yuan (if the data involved in the above indicators is negative, the absolute value shall be taken).

"This rule is very strange and emphasizes" three years in a row ". If a listed company has made fraud for two consecutive years, can it not do so in the last year?" Beijing area a large securities firm investment bank personage expresses his perplexity so.

The investment bank believes that listed companies should directly trigger delisting if the proportion of fraud in a single year exceeds twice the net profit.

In addition, there are disputes about the expression of "and" in the new rules.

The investment bank said, "even if the three consecutive years of financial fraud may not be OK, because the amount of false increase does not exceed double the net profit or the total fraud does not exceed 1 billion yuan, there will be no compulsory delisting."

He further analyzed, "for example, my annual net profit is 50 million yuan, with a virtual increase of 300 million yuan. For three consecutive years, it is 900 million yuan. The total fraud is less than 1 billion yuan, and still will not trigger delisting."

According to an auditor in South China, the third delisting standard "the total amount of false records in each subject of the balance sheet for three consecutive years has exceeded 50% of the net assets disclosed in the annual report of that year, and the total amount of false records in the three years has reached more than 1 billion Yuan". Because financial fraud is accounted for in the total amount of false records, and the total amount of financial fraud may double due to double bookkeeping, which is more likely to trigger delisting criteria.

Even so, Wang Jiyue, a senior investment banker, believes that a pharmaceutical fraud case, which has aroused great social concern, does not need to be delisted under the new rules.

"The profit statement was forged for three years, but none of them exceeded 100% of the net profit of that year. The balance sheet identified that there were false records in the semi annual reports of 2016, 2017 and 2018, and the false increase of monetary funds exceeded 50% of the net assets every year. However, due to the detection of fraud in 2018, monetary funds were corrected after the semi annual report, resulting in a virtual increase of less than 50% of net assets in the third year, which is not in line with the target of reaching 50% of net assets for three consecutive years. " Wang Jiyue said that as the regulatory authorities found out the serious fraud in a pharmaceutical industry in time and corrected the mistakes before the fraud for three consecutive years, it was able to retain the listing qualification without touching the delisting index.

However, some investment banks close to the regulatory level disclosed to the 21st century economic report that companies such as St Conde will still be forced to delist due to triggering the third major illegal delisting standard.

It is expected that major violations can be cleared quickly

Although controversial, the introduction of the new regulations also shows the determination of the supervision to promote the delisting system reform.

An industry person told the 21st century economic report that "there was no quantitative financial fraud index in any previous version of delisting rules. This time, it has been quantified and improved the operability and enforceability. From the perspective of legalization, it is a progress or exploration."

According to the market feedback that the delisting standard triggered by financial fraud is not strict, the industry insiders believe that the revised rules of the exchange have made arrangements for cases with extremely large amount of counterfeiting and extremely bad circumstances. After triggering the standard, listed companies will clear up faster than the general delisting procedures.

The industry insiders stressed that "the core of the amendment of the rules is to quickly clear the companies with serious financial fraud, which is a progress compared with the original rules. Before that, listed companies would take risks to avoid delisting due to financial standards. The regulatory authorities have previously restricted this, but the purpose of counterfeiting is not to avoid delisting, and the new regulation has filled in the gap in this respect. "

It is worth mentioning that according to the measures for the implementation of compulsory delisting of listed companies due to major violations of the law, listed companies will be forced to terminate their listing if they have false records, misleading statements or major omissions in the process of IPO, reorganization and listing, and disclosure of annual reports, and are punished by the CSRC or convicted by the people's court.

In the view of many industry insiders, financial fraud does not trigger delisting standards after the implementation of the new rules in the future, which does not mean that enterprises will not be forced to delist. Listed companies' financial fraud constitutes a major violation of the law, and will still be transferred to the public security organs or the CSRC to issue administrative penalties, and then be forced to delist. The regulatory authorities are more flexible in this, and the delisting rules will complement each other.

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