On October 15, 2014, the China Securities Regulatory Commission issued the Several Opinions on Reforming, Improving and Strictly Enforcing the Delisting System for Listed Companies (hereinafter, the "Delisting Opinions"), which entered into effect on November 16, 2014.
The Delisting Opinions primarily improve the delisting system in the following two dimensions.
The first dimension involves voluntary delisting. The Delisting Opinions improve the voluntary delisting system for listed companies and create seven methods by which listed companies may delist voluntarily. The Delisting Opinions specify the internal decision-making procedure of a company seeking to be delisted voluntarily and stipulate that a listed company which seeks to be delisted from an exchange or to apply for trading or transfer in another trading premises is required to call a shareholders' meeting to adopt a resolution, which requires the approval by shareholders attending the meeting with two thirds of the voting powers and by minority shareholders attending the meeting with two thirds of the voting powers.
The second dimension involves compulsory delisting. The Delisting Opinions also specify three scenarios where a listed company will be delisted, i.e., the system for compulsory delisting of companies that violate the law in material aspects, the compulsory delisting indicators, which will be strictly enforced against listed companies that do not satisfy trading requirements, and the compulsory delisting indicators, which will be strictly enforced to reflect the financial conditions of companies. In addition, the Delisting Opinions also provide for enhance protection of the lawful rights and interests of investors who invest in delisted companies.
Pursuant to the Delisting Opinions, the Regulations for Stock Listing at Shanghai Stock Exchange, the Regulations for Stock Listing at Shenzhen Stock Exchange, and the Regulations for Stock Listing in the Growth Enterprise Market of Shenzhen Stock Exchange were also amended accordingly.