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Shanghai Exchange warns agencies about responsibilities

(ATF) – The Shanghai Stock Exchange has issued a warning to lawyers, accountants and all professionals working under the new Securities Law to make sure they fully understand their new responsibilities.

“The fault presumption and joint liability of securities service agencies, and of their responsible personnel, are equally responsible for due diligence,” the Exchange said in a statement.

The revised Securities Law and State Council notice clarified the implementation of registration for public offerings of corporate bonds and revised the statutory conditions for public offerings of bonds.

The amendment has fully considered the differences between the bond market and the stock market, to reflect the characteristics and laws of the bond market. The main changes include changing the approval system in the registration system. 

The public issuance and listing of corporate bonds has been reviewed by the exchange, while the china Securities Regulatory Commission has checked the issuance registration. 

The new law adjusts the conditions for the public issuance of corporate bonds – adding the condition that firms must “have a sound and well-functioning organization”, while a term about “minimum company net assets” was deleted.

“The cumulative bond balance should not exceed 40% of the company’s net assets,” was added.

At the same time, the State Council Notice clearly stated that in addition to meeting the conditions stipulated by the securities law, an issuer’s public offering of corporate bonds should also have a reasonable asset-liability structure and normal cash flow.

A further change was to adjust the conditions for applying for listing and trading of corporate bonds – removing conditions such as “the duration of corporate bonds is more than one year.” 

These provisions will be decided case by case, and authorize the stock exchange to make specific provisions on the conditions for listing of corporate bonds.

Besides enforcing more information disclosure, the legal duties of issuers and securities service agencies have been consolidated and are agencies made responsible for any fraud cases.

Chris Gill

With over 30 years reporting on China, Gill offers a daily digest of what is happening in the PRC.


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