Loopholes seen in relisting guidelines

Authorities at stock exchanges in Shanghai and Shenzhen rolled out new delisting measures Friday, marking the latest in a series of moves to protect investors through enlarged regulatory guidelines.

Among the new rules, those governing relisting garnered much attention. Some believe the hurdles to relisting are too low for certain companies booted from the market. Critics say small investors could suffer from the modified mechanisms.

Specific shortfalls include the lack of an intervening period between a company's delisting and relisting. This means that a company that loses its spot at local bourses could implement relisting plans the next day. And if companies collude with large shareholders during this process, small investors could be left to absorb the real price of such dealings.

Delisting should not be seen as a minor inconvenience. If the threat of delisting isn't taken seriously, rule-breaking and financially distressed companies will make a mockery of efforts to improve Chinese exchanges. For starters, an appropriate cooling-off period should be imposed on companies that get delisted.