| In April, 2001, Shanghai Stock Exchange formally declared the PT Daffodil's exit from the stock market. It is the first company ever exiting from the security market, which shows the determination of CSRC( China Security Regulatory Commission) to clear the "trash stock", and marks the formal start-up of exit mechanism of listed-stock companies in our country. A healthy security market has to allow the entry of the companies and exit as well. Supposed that there were only the entry of the listed-stock companies without exit, how could the security market with an abundance of "trash stock" attract the investors? In the long run, it would be certain to break out the credit crisis. Therefore, it is necessary for a maturing security market to set up an exit mechanism of listed-stock companies. However, the current legislation of our country is not optimistic. There are mainly the institutional regulations in the Act of the Company and the Act of the Security, and the Implementary Guidelines on Suspend and Termination of the Listed-stock Companies at a loss enacted by CRSC in April, 2001 and further revised in December. All these rules and regulations are imperfect and mostly infeasible. For this reason, it is urgent to set legislation on exit of the listed-stock companies, so as to improve the exit mechanism in Chinese security market.The legal problems on the exit of the listed-stock companies insofar as are as follow:Firstly, there are some ongoing obstacles for the listed-stock companies to exit, ranging from the operational turbulence to the imperfection of the legislation. What the imperfections are and the reasons for them are the first aspect in my thesis.Secondly, after the exit of the listed-stock companies out of the security markets including the main board market and the future second market, the "outlet" is the most significant issue facing the companies. The exit does not mean the bankruptancy. Then, what is the "outlet" for the listed-stock companies after exit, and how to regulate them legally, are the second aspect in my thesis.Thirdly, after the exit of the listed-stock companies, the problem of how to protect the benefit of the stockholders arises. Indeed, the prudent investment is required by the risky stock market, where the risks can be subdivided into systematic risks and non-systematic risks. Therefore, with both risks, the protection of the stockholder's benefit is the third aspect in my thesis.The overseas stock markets have had a hundred years of history for the research on the exit mechanism of the listed-stock companies and its operation. Referring to the regulations and the forms on the exit of the listed-stock companies in the overseas stock market (NASDAQ Stock Market in U.S), and combining with research and reforms to set up the exit mechanism of the listed-stock companies by Chinese related authorities for years, this thesis proposes to set up a centralized and hierarchical stock market system, including the main board market, the second market and the curb market. In this clearly hierarchical market system, the entry and the exit have rules to follow. As for the exit sequence, when the listed-stock companies cannot meet the requirements in main market, with a poor performance and deteriorating financial statements, they can exit to the second market. In the same way, when the listed-stock company cannot meet the requirements in the second market, they can exit to the curb market. The three clearly hierarchical markets have functions of there own respectively. In accordance with the different listed-stock conditions and regulations in different markets, the listed-stock companies should be in easy entry and exit, thus fully implementing the market functions of nature selection, or "the survival of the fittest". Therefore, a hierarchical security market system and the exit mechanism of the listed-stock companies are interacting to each other and reciprocally promoting.The hierarchical security market system can provide a necessary access and outlet for the...
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