SSE releases new rules for delisting

The Shanghai Stock Exchange (SSE) released four sets of supplementary rules Sunday aimed at completing its delisting rules for Shanghai-listed companies.

The new rules stipulate implementation details in four major aspects mentioned by the revised delisting rules - the risk warning board, the delisting period, the transfer system for delisted shares, and relisting regulations - the SSE announced on its official website Sunday.

"With all these supplementary rules, the exchange has completed rules for a company to go public or to be delisted, which are expected to cover every step a company may encounter during the delisting process, including risk warning, trading suspension, trading resumption, trading termination, delisting period, share transfer and relisting," Li Daxiao, director of research with Yingda Securities, told the Global Times Sunday.

The SSE also said that it had solicited public opinion for all these rules.

A risk warning board - for the trading of stocks under special treatment (ST) or with a delisting risk warning (*ST), and stocks to be delisted - will start operation on January 4, 2013.

Unlike the previous draft rules, the fluctuation limit for ST and *ST shares will be 5 percent instead of 1 percent for the upper limit and 5 percent for the downward limit. Stocks to be delisted will be allowed to go up and down by no more than 10 percent.

Meanwhile, a major change in the new delisting rules is that the SSE will also establish a share transfer system for delisted companies, which will only allow one bid price each trading day with a price-change limit of 5 percent.

"In doing so, the exchange provides an exit for investors holding delisted shares. But at the same time, it can also restrict the circulation of these shares to curb speculative trading," Li said

Another big development with the new rules is the relisting regulations enabling delisted companies to go public again. As long as a delisted company meets the requirements of the SSE's listing rules, it can apply to the exchange for a relisting after being delisted for more than one fiscal year.

"The relisting rules ensure that even the underperforming companies will have the chance to go public again if they can improve their business performance or carry out major asset reorganization," Li noted.

The Shenzhen Stock Exchange also rolled out similar rules for relisting and delisting on its official website Sunday.