The China Securities Regulatory Commission ("CSRC") on July 4 released its Several Opinions on Reforming, Improving and Strictly Implementing the Delisting System for Listed Companies (Draft for Comment) (the "Opinions") for public comment until August 5, 2014.

The Opinions specify seven circumstances under which a listed company is allowed to apply for voluntary delisting due to merger, buyback, merger by absorption and other market activities. Given the specificity of voluntary delisting, the Opinions make special arrangements that are different from those for mandatory delisting with respect to the implementation process, subsequent arrangements and others, including having the delisting decision to be voted on and approved by the majority of the shareholders, engaging an independent financial consultant to ensure the professionalism, requiring independent directors to issue opinions, etc. Meanwhile, a company that decides to delist voluntarily shall submit an application for delisting to the stock exchange and obtain approval from the stock exchange.

The Opinions impose mandatory delisting requirement on companies that materially violate law. According to the Opinions, if a listed company is subject to any administrative penalty imposed by the CSRC due to its issuance of shares in bad faith or violation of law in disclosure of important information, or is referred to the public security organ by the CSRC on suspicion of having committed a crime, its shares shall be suspended from the listing for trading.