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Consecutive Loss-Making Listed Firms to Be Delisted in China
China will soon suspend or delist firms recording consecutive figures in the red, the China Securities Regulatory Commission (CSRC) announced Tuesday.
The detailed regulations for the delisting of stocks will be released soon, a spokesman for the CSRC said.
China's Securities Law and Company Law both have provisions on the delisting of stocks, but in practice such provisions have never been enforced.
According to the spokesman, the CSRC has been preparing for the introduction of the delisting system for a long time. The establishment of the Special Treatment and Particular Transfer for stocks of firms operating in a loss is an effort in this line to remind investors of the risks involved in the trading of such stocks.
By the regulations to be released, companies with losses in three consecutive years and failing to produce profits in a prescribed period of time will be delisted.
Delisted firms can apply to be put back on the list after reporting profits, upon approvals from the regulators, the spokesman said.
Analysts here pointed that the establishment of the delisting mechanism is of great significance in improving the quality of China's listed firms, advocating rational investment and promoting the healthy and sustainable development of China's stock market.
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