The Analysis Of New Compulsory Delisting Mechanisms In China Based On The Case Of Boyuan Investment Company

Delisting is a circumstance that due to not meet the financial and other listing standards or for internal strategic adjustment, a listed company terminate its listing actively or passively, become into a private company. Delisting can be divided into initiative and passivity. In February 2001, the Securities and Futures Commission promulgated the loss of the measures for the implementation of the listing of the listed company suspended and termination, which marks the establishment of China's stock market exit system. But in the past 15 years, every year, the number of delisted company is only single-digit, delisting rate is less than 1%. Under the background of authorization in stock issuance, scarcity of the shell resource makes a few listing company exit market actively. Even though some firms no longer conform to the listing standards, they still try their best to save the listed qualifications. Under the original compulsory delisting standards, a large number of companies avoid delisting via earnings management and financial fraud, which has seriously blocked the listed the financing channels, hindered the shares listed on the implementation of the registration system, is not conducive to enterprise development and China's economic structural reform. So, at present,the focus of the delisting system reform should put on the compulsory delisting. From 2012 to 2014, the China securities Regulatory Commission launched a new round of reform of delisting system, especially pay attention to improve the compulsory delisting standards, mainly reflected in four aspects: the first one is clear the implementation of major illegal company compulsory delisting system; the second is strictly carry out market transactions, financial index of compulsory delisting; thirdly, improve the compulsory delisting related supporting system; the last is strengthen the protection of compulsory delisted company investors' legitimate rights and interests.Based on this background, this article will explore the new compulsory delisting rules via the case of Boyuan Investment Company. It's a first company that starts compulsory delisting procedures for major violations. The article is divided into five parts. The first chapter is introduction. The second chapter is the base of full text; it analyzes the alienation of stock market function and inadequate protection of the rights and interests of investor under the compulsory delisting rules. The third chapter is about a case study of Boyuan Investment Company. The fourth chapter is to find the defects in the new rules based on the case study in the chapter three. The last chapter put forward some advices to the new compulsory delisting rules according to its defects.