Jurisprudential Analysis On The Standard Of Forced Depreciation Of Listed Companies In China

A Listed company is a product of highly developed market economy, and is also a dynamic corporate entity bred or created by the securities market. In contrast to listed company, the delisting of a listed company refers to a situation when the qualification of a listed company is revoked, which, in another word, the qualification to list its stock has been terminated, while the compulsory delisting of a listed company shall refer to its involuntary withdrawal from the securities market due to violation of relevant compulsory delisting standard. In our country’s securities market, since the lack of complete and feasible standard for the delisting system, it rarely has any delisting case, which may seriously impacts the resource flow of securities market, as well as the effective implementation of its function. Based on the classification, conclusion and legal analysis made on the compulsory delisting standard for listed companies under mature capital market both at home and abroad, while in combination of the empirical investigation of specific delisting cases, this paper has proposed the improvement suggestions for the law on compulsory delisting of listed companies. This paper can be divided into 4 sections.Section 1 is the theoretical basis of this paper, in which it mainly discusses relevant conceptions and connotations for delisting of a list company, differentiates the compulsory delisting and voluntary delisting of a listed company, as well as analyzes the legal basis for compulsory delisting of a listed company, in particular, it elaborates its necessity from 3 aspects including the principle of efficiency, contract theory and life cycle theory.Section 2 proposes the argument of this paper, in which it first analyzes our country’s legal provisions on the system for delisting a listed company in history. Secondly, based on the Scheme on the improvement of delisting system, which is enacted by the Shanghai and Shenzhen Stock Exchanges before the promulgation of the Delisting Opinions, as well as on the amendments made on the relevant content of delisting part in each listing rule as a response to the call of Delisting Opinions, the author has summarized and concluded the country’s newly enacted compulsory delisting standard and also raised a problem of our securities market concerning over low efficiency in delisting and its causes.Section 3 is the main body and innovative point of this paper, in which, based on the subjective and objective judgment, the author classifies the country’s delisting standard into two large categories, namely the disqualification of the subject and objective assessment standard, and the objective assessment standard can be further subdivided into quantitative criteria and non quantitative criteria, wherein the quantitative criteria refers to the standard that can be specified in terms of numbers, which includes not only the financial indexes, such as the net asset and net income, but also the market performance indicators represented by the stock trading volume and closing price of stocks, as well as a unique standard only applicable to growth enterprise market, which is that for any listed company in growth enterprise market that has received public condemnation by a Stock Exchange within the most recent 36 months, while the non quantitative criteria mainly raised its requirements from such aspects as the governance structure and information disclosure for a company, including those standards that can not be quantized by a specific number, such as defrauding issuing company and breaking the law in disclosing important information. Based on this classification standard, the author then makes specific elaboration and analysis of the legal basis and application circumstances of compulsory delisting standards under each category, including making comparison between regulations in mature capital markets.Section 4 is the concluding remarks of this paper. Stock, as a carrier for the trading of listed companies, whether or not it has any actual value is the applicable criteria to judge whether a listed company should be delisted or not. Only by following this economic criterion, can we prepare a detailed and operable legal regulation in this aspect. In conclusion, through making investigation and analysis of the compulsory delisting system in mature capital markets, and by performing theoretical research of current compulsory delisting standard of the country, the author has thought and proposed several suggestions on improvement of the legal system for compulsory delisting of a listed company in China.