The Anatomy Of Disclosure Regulations Of Unlisted Public Companies

Due to the stringent listing standards and regulatory procedural constraints, the listed companies represent only a small part of contemporary companies. In fact, it is unlisted public companies that account for the majority of modern companies, and play decisive roles on today's capital market. Allowing unlisted companies with excellent prospects to issue their stock in a public market may act probably as a legitimate and efficient platform for these companies raising capital and promoting the further development of them. On the other hand, on behalf of the investors'preferences for risk, it also provides investors a convenient, high-return investing market. However, the virtual, capital-intensive and faith-intensive natures of the capital market itself, as well as the translucent features of unlisted companies themselves have set some potential danger of unlisted companies, including conflicts of interest, moral hazard, and even legal risks. But for investors, high-return investment is always related to a huge risk. To strengthen the supervision of unlisted public companies, certain acts should be passed and enforced. On the one hand, set a set of procedural regulations for unlisted companies, including market access, share issue, shares trading, as well as the exit rules. On the other hand, provide investors a relatively smooth flow channel of information to ensure their free decision-making power, realize their right of shareholders.Information disclosure is not only the key to unlisted public company supervision, but also an important access rule for unlisted public companies in entering the OTC market. Countries with mature capital markets such as the United States, Britain, and Germany take the information disclosure as a priority in unlisted public company regulation. China, However, because of the imperfect capital market, and the immature market supervision system, unlisted public company regulation has always been the weak point of China's securities supervision. Although the Securities Association of China in 2001 published the "Implementation Rules of Information Disclosure for Share-Transferring Companies", the disclosure of unlisted public companies remains in a mess. For the reason above, we believe it is high time that ensured the authenticity and effectiveness of disclosure of unlisted public companies, and kept a balance between cost and benefit of disclosure. In this article we will take the perspective from empirical and comparative law, as well as economics, analyze legislation and practical experience of Britain, the United States, Germany, Japan, Somme up the status quo of China's legislation for unlisted public companies, discuss theoretical basis for the rules. This article is divided into three sections, introduction, text, conclusions included. The text consists of four chapters: First, definitions of unlisted public companies and disclosure; second, theoretical basis of unlisted public company disclosure; third, legislation and practices of unlisted public company disclosure; at last, improve the information disclosure system of China's unlisted public companies. Specifically, each section of this article includes the following elements:Introduction. In this section, we will give a brief discussion on the main topic and a brief introduction of the basic research ideas of this article.In the first chapter, first of all, we will try to make a clear idea about what is unlisted public company? What is OTC, share-transferring, pink-sheet market, and other concepts related to unlisted public company? Secondly, compared with other companies, what are the special factors of information disclosure of unlisted public companies? Finally, what do the institutions of information disclosure of unlisted public companies consist?In the second chapter, we take duel perspective from law and economics, to examine the institutional value, regulatory costs, to make a balance of cost and benefit of information disclosure in unlisted public companies. We will testify that disclosure is not only a method for protecting the shareholders, reducing exchanging cost, but also a effective way to avoid market failure.The third chapter will be divided into three parts. Part I analyze the status quo of information disclosure of unlisted public companies in the United States and Britain, noting that information disclosure of unlisted public companies mainly includes the information disclosure of first issue and continuous disclosure. Part II and Part III, based upon legislative experience in the United States, Britain, Japan, point out the contents and standards of the issue disclosure and continuous disclosure, somme up China's current legislation, and point out defects in existing law.In the fourth chapter, we will comment on the current status of equity transactions, information disclosure in China's unlisted public companies. We will also give some practical advice to promote the legislation of unlisted public information disclosure.Conclusion, in this part, we will sum up observations commented above.