The Gem Listed Company Delisting Legal System Research

In the wide attention of the society, China Growth Enterprise Market(CGEM) was established and started trading in the end of October2009.The CGEM has played a major role in encouraging and leading societyinvestment, supporting the development of Innovative Enterprise for thelast two years,, meanwhile it also confronts with problems such as phageswings of the listed companies’ performance accomplishment, executives’cashing out and quitting, high proportion super-raise funds, and calls forcontinuous self improvement.A perfect security market should not only have one delicate systemfor IPO, but also a strict delisting system, so that fittest can survive, theold be replaced through the adoption of the new, the social resource beoptimally allocated. Thus, the energy as well as the dynamic balance ofthe market would be guaranteed. The listed companies on CGEM shares acommon pattern of small size, swings in the performance and high risk. Astrict delisting system would impel the firms to improve the governanceinstitution and ensure the interests of the investors. However, up toFebruary29,2012, of all the306listing companies on CGEM which havea market value of755.45billions, raise funds for194.688billions, nonehas been delisted. The delisting system exists in name only. The purposeof this paper is to give advices on the CGEM delisting system, based onthe analysis of the present status of CGEM as well as the comparison ofthe overseas mature securities markets.This paper contains five chapters:Chapter I is the introduction. To begin with, the passage elaboratesthe background and the significance of the chosen topic, illustrating theimportance of the establishment of the delisting system of CGEM; Next, it summarizes research on the relevant subjects in recent years; Finally, itgives a brief introduction on the research method of this paper.Chapter II describes the principle theory of the CGEM delistingsystem. Firstly, the passage generalizes the legal content of this system;Secondly, it illustrates the basic theories of the delisting system, whichinclude the economics theories such as the Modernistic Contract Theory,the Theory of System Economics and Financial Risk Management Theory，as well as the jurisprudence basis of order and justice; Finally, it describesthe significant function which the delisting system plays in the aspects ofthe market, companies and the investors.Chapter III makes a brief analysis of the current status of the CGEMdelisting system. This chapter firstly introduces the standards&procedureof delisting, then gives comments on the deficiency of the system, finallyintroduces “the Scheme of Optimizing the CGEM Delisting System(exposure draft)” promulgated recently by Shenzhen stock exchange.In order to provide a reference for the domestic system construction,Chapter IV compares the delisting systems of the overseas maturesecurities markets on the aspects of way of delisting, delisting standards,delisting procedures and the capital market environment.Chapter V is the highlight of this paper, which makes proposals onthe previously mentioned inadequacies of the current delisting system.These advices include bringing in system of voluntary delisting, speed upreforms on self-disciplining of the stock exchanges of China, establishingthe hearing system and developing a better capital market environment.