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Read in Chinese
Speakers:
Mr. Li Chao, vice chairman of the China Securities Regulatory Commission (CSRC)
Mr. Yan Bojin, chief risk officer of the CSRC and director general of the Department of Public Offering Supervision of the CSRC
Mr. Shen Bing, director general of the Department of Fund and Intermediary Supervision of the CSRC
Mr. Guo Ruiming, director general of the Department of Listed Company Supervision of the CSRC
Mr. Zhang Chaodong, a person in charge of the Department of Personnel and Education of the CSRC
Chairperson:
Ms. Shou Xiaoli, deputy director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO
Date:
March 15, 2024
Shou Xiaoli:
Ladies and gentlemen, good afternoon. Welcome to this press conference held by the State Council Information Office (SCIO). Today, we are very pleased to have invited Mr. Li Chao, vice chairman of the China Securities Regulatory Commission (CSRC), to brief you on strengthening regulation and forestalling risks to promote high-quality development of the capital market, and to take your questions. Also present at today's press conference are Mr. Yan Bojin, chief risk officer of the CSRC and director general of the Department of Public Offering Supervision of the CSRC; Mr. Shen Bing, director general of the Department of Fund and Intermediary Supervision of the CSRC; Mr. Guo Ruiming, director general of the Department of Listed Company Supervision of the CSRC; and Mr. Zhang Chaodong, a person in charge of the Department of Personnel and Education of the CSRC.
Now, I will give the floor to Mr. Li Chao for his introduction.
Li Chao:
Friends from the media, good afternoon. Today, we are releasing four key documents. I'd like to take this opportunity to introduce the main background and summarize the contents of these documents.
To thoroughly implement the guiding principles of the Central Financial Work Conference and in accordance with the relevant work arrangements of the State Council, the CSRC, in collaboration with relevant parties, has formulated and issued four documents after careful investigation and research, and gathering opinions from all involved parties. The first document focuses on tightening scrutiny over initial public offerings (IPOs) and improving the quality of listed companies from the source. The second document aims to strengthen the supervision of listed companies. The third document focuses on enhancing the supervision of securities companies and public funds, as well as expediting the establishment of first-class investment banks and investment institutions. Lastly, the fourth document emphasizes implementing strict standards for political integrity, capability development and disciplined conduct, thereby comprehensively enhancing the self-improvement of the CSRC system. Of these four documents, the first three will be released in full today, while the main content of the fourth document on self-improvement will be announced through a press release.
In formulating these documents, we have paid attention to the following aspects:
First, we have adhered to goal orientation and problem orientation. We have focused on accelerating the construction of a safe, regulated, transparent, open, dynamic and resilient capital market, enhancing the market's functions and roles. We did not avoid contradictions, faced problems directly, effectively responded to market concerns, and developed a path for the capital market with Chinese characteristics.
Second, we have firmly focused on the key priorities of strengthening supervision, preventing risks and promoting high-quality development. Strong supervision and risk prevention are essential for high-quality development and are areas in which investors and market participants have voiced many opinions and suggestions. This document emphasizes "strengthening the foundation" and "strict supervision and management." On one hand, it focuses on improving the quality of listed companies, protecting the legitimate rights and interests of investors, and further enhancing market supervision measures. On the other hand, it also emphasizes the need to address internal challenges and strengthening the management of the CSRC.
Third, we have maintained a systematic approach and implemented comprehensive strategies. The documents issued this time form an organic whole, systematically proposing policy measures from various aspects such as IPOs, continuous supervision of listed companies, and supervision of intermediaries.
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Now, I will briefly introduce the main contents of the documents.
Firstly, the document on tightening scrutiny over stock listings aims to improve the quality of listed companies from the source. It comprehensively and strictly strengthens the supervision of IPOs, tightening the responsibilities of all relevant parties in the entire issuance supervision chain. It includes a total of eight policy measures. These are: strictly controlling the quality of declarations of companies planning to list, prohibiting the blind pursuit of listings and excessive financing for profit-making purposes, and promptly and strictly pursuing responsibilities for financial fraud, false statements and misleading packaging in accordance with the law; implementing a system of regular and periodic inspections to ensure comprehensive and continuous oversight, and strengthening the accountability of intermediaries as "gatekeepers"; highlighting the primary responsibility of the exchange review, closely monitoring whether companies planning to list engage in last-minute dividend distributions prior to listing, and strictly supervising overpricing and overfunding; considering the secondary market's capacity and implementing necessary adjustments for the issuance of new shares; significantly increasing the proportion of random inspections on companies planning to list and intensifying problem-oriented on-site inspections; studying the enhancement of listing standards and conducting strict reviews of unprofitable companies; strengthening the thorough supervision of shareholders of companies planning to list to prevent illegal wealth accumulation through unlawful practices; and strengthening the entire chain of supervision and accountability mechanisms. If members of the listing committee and registration reviewers are found to have committed serious negligence or violated disciplinary integrity, they shall be held accountable to Party discipline and administrative responsibilities for life.
The second guideline focuses on enhancing the supervision of listed companies. Aimed at boosting investment value and protecting investors, it outlines 18 measures to address key issues of wide concern, including combating financial fraud, strictly regulating share reduction, improving dividend oversight, and bolstering market value management. According to these measures, efforts will be made to promote the establishment of a comprehensive system for preventing and penalizing financial fraud in the capital market and enhancing thorough supervision capacities to ensure transparent performance and authentic data. Share reduction will be appropriately linked to dividends and situations where the stock price falls below net asset value or below the issue price. Entities found in violation will be ordered to buy back unlawfully reduced shares and submit the price discrepancies. Oversight of cash dividends will be fortified to increase investor returns. Actions will be taken to ensure that listed companies take primary responsibility for managing their market value and to encourage high-quality companies to actively engage in share buybacks.
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Li Chao:
The third is the guideline on enhancing the supervision of securities firms and public offering funds. This document concentrates on rectifying the positioning of industry institutions, promoting their functional performance, improving their professional services, and enhancing oversight effectiveness. According to the 25 measures outlined in the guideline, industry institutions will be urged to rectify their operational ethos, prioritize their functions, and effectively fulfill their fiduciary duty. Efforts will be made to refine the mechanism for preventing conflicts of interest and rigorously crack down on illegal acts by shareholders and actual controllers compromising the interests of institutions and investors. Determined efforts will be made to combat misconduct such as the pursuit of money, extravagance, seeking quick profits, and flaunting wealth. Personnel management and supervision will be strengthened to maintain integrity within the industry. Cooperation will be provided to competent departments to continue improving the remuneration management system for industry institutions. The guideline also proposes vigorously developing equity funds and fortifying the core investment and research capacities of public offering funds to improve services for investors. Additionally, the access management of shareholders and businesses will be reinforced, and the qualification criteria and associated systems for senior executives will be upgraded. At the same time, the document places equal emphasis on penalizing both institutions and individuals, imposing both economic and disqualification punishments, and ensuring regulatory accountability and self-discipline, thereby encouraging industry institutions to enhance their own capabilities.
The fourth document focuses on enhancing the self-improvement of the CSRC. Strengthening self-improvement is organizationally crucial for the CSRC to comprehensively fulfill its primary regulatory responsibilities and to promote the high-quality development of the capital market. This document emphasizes a commitment to strictness, facing issues head-on, being strict with the CSRC itself, and leading self-development through self-reform. It advocates for further promoting the exercise of full and rigorous Party self-governance, improving Party conduct and building integrity, and combating corruption. It outlines measures in three respects. First, it emphasizes political integrity, upholding and strengthening the Party's overall leadership in the capital market and implementing the requirements of political and people-oriented specific regulatory tasks, effectively safeguarding the legitimate rights and interests of the vast number of small- and medium-sized investors. Second, it highlights capability development, striving to cultivate a team of regulatory officials capable of shouldering significant responsibilities. Additionally, policies incentivizing officials to take on responsibility, be proactive in their work, and strictly enforce accountability will be refined. Third, it underscores disciplined conduct, ensuring the strict tone, measures, and atmosphere are consistently upheld. Furthermore, rigorous actions will be taken to address the issue of officials entering the business sector after leaving government or vice versa and to rectify pointless formalities, bureaucratism, hedonism, and extravagance. A tough stance will be continuously maintained against corruption.
Following the release of the four documents, we will expedite the introduction of supporting rules and institutional measures. Through these policies and measures, we aim to promote the establishment of institutional mechanisms conducive to the long-term stability and development of the capital market, thus advancing its progress with Chinese characteristics more effectively.
That's all for my introduction. Thank you!
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Shou Xiaoli:
Thank you for your introduction, Mr. Li. The floor is now open for questions. Please identify your media outlet before asking questions.
Red Star News:
The introduction mentioned the importance of strictly managing access to IPOs to enhance the quality of listed companies from the outset. What specific measures will be taken in this regard? Thank you.
Yan Bojin:
Thank you for your question. This time, the CSRC issued a document dedicated to enhancing access to IPOs, outlining several targeted measures. Some of these measures reinforce past effective practices, while others introduce new arrangements. The core objective is to fortify the regulatory chain for IPOs, enforce stricter oversight, and enhance the various functions of the market. Practical observations have revealed deficiencies such as unsound internal control mechanisms, irregular corporate governance among some prospective listed companies, and even instances of financial fraud. In response, we will strengthen supervision across all links of the entire IPO chain. Prospective listed companies must adopt a correct IPO mindset, effectively implement the modern corporate system, and assume primary responsibility for the quality of information disclosure. Intermediary institutions must diligently fulfill their role as "gatekeepers" by fully employing methods such as verifying cash flow to ensure financial authenticity. We will also establish a regular and ongoing on-site supervision mechanism for intermediary institutions, aiming for full coverage within a three-year cycle. Exchanges must fulfill their duty as the primary reviewing party, enhance their examination of prospective listed companies, and stringently regulate overpricing and over-funding. Additionally, the CSRC will intensify institution establishment, implementation, and coordination, and significantly increase the proportion of on-site inspections. We will deepen interdepartmental oversight cooperation and ensure retrospective checks and accountability for fraudulent issuance and other activities violating laws and regulations throughout the entire IPO chain.
We have also fully drawn on the opinions and suggestions of all parties in the market, and there will be stricter requirements for the listing threshold, mainly in three aspects. First, modern corporate systems must be established before listing. The funds of investment projects should be reasonable, complete with well-conceived short-, medium- and long-term plans. Sudden "clearance-style" dividend payment should not be carried out, and the "key minority" should have a good reputation. Second, we will study and improve the listing indicators for some boards. From the perspective of regulatory practice, the current financial indicators for listing in some boards are relatively low and the comprehensive indicators are insufficient. They do not fully guide the diversion of enterprises to appropriate boards. We have also heard many market voices suggesting improvement to listing indicators. We will carefully analyze and systematically study this matter, especially by referring to the situation of newly listed enterprises in recent years and enterprises now under listing application review, and then guide the Shanghai and Shenzhen Stock Exchanges to revise the listing rules, appropriately raising the financial indicators for some boards and enriching comprehensive indicators, so as to enable enterprises at different stages of development, in different industries, and with different sizes to list in appropriate boards. Third, we will strictly regulate the listing of unprofitable enterprises. In practice, the development of technology companies may have an unprofitable stage, which does not necessarily mean that these companies have poor continuous operating capabilities. Some high-quality technology companies can grow better and faster through listing, but they must not be "pseudo-technology" enterprises that piece together technologies. In this regard, we will seek the opinions of relevant industry authorities on the technological quality of unprofitable enterprises, and better coordinate the support for technological development and the protection of investors' interests. Thank you.
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CCTV:
We have just heard Vice Chairman Li Chao talk about the CSRC's efforts to further advance full and rigorous Party self-governance, improve Party conduct, build integrity, and fight corruption. Could you please elaborate on the important measures and work arrangements in this regard to provide critical support for the high-quality development of the capital market? Thank you.
Li Chao:
Thank you for your question. We deeply understand that the capital market is a highly regulated and transparent market, which requires an incorruptible market environment. Financial corruption not only seriously hinders the effectiveness of the capital market in serving the real economy but also seriously undermines the authority of regulatory departments and their image in society. The people, especially investors, deeply abhor this. With a deep understanding of General Secretary Xi Jinping's important thoughts on the Party's self-reform, the CPC committee of the CSRC and the discipline inspection and supervision group stationed at the CSRC fully implement the spirit of the Third Plenary Session of the 20th CPC Central Commission for Discipline Inspection and continue to advance efforts in exercising full and rigorous Party self-governance, improving Party conduct, building integrity, and fighting corruption. A systematic approach is adopted, focusing on coordinated and sustained efforts to ensure officials do not have the audacity, opportunity or desire to be corrupt.
First, we have strengthened the deterrent effects towards corruption. The area of public offering review is at high risk for corruption, which the market is highly concerned about. In accordance with the unified deployment of the CPC Central Commission for Discipline Inspection and the National Supervisory Commission, the discipline inspection and supervision group stationed at the CSRC has continuously intensified its efforts and conducted a special campaign against corruption in the area of public offering review. So far, we have investigated and handled 16 typical corruption cases with those under investigation including Zeng Changhong, Wang Zongcheng, Feng Henian, Liu Ti and Cao Jian. These cases have involved CSRC officials at the director-general level, stock exchange executives, members of the public offering review committee and employees of market intermediary institutions. Through the investigation and handling of these cases, we have resolutely combated new and hidden forms of corruption in the capital market, such as abandoning regulatory responsibilities, disrupting regulatory order, creating financial risks and infringing on the rights and interests of small and medium-sized investors.
Second, we have improved the mechanisms for reducing corruption opportunities by making relevant institutions tighter and stricter. Reducing corruption opportunities relies primarily on institutions. In accordance with the opinions of the discipline inspection and supervision group stationed at the CSRC on "promoting better practices through cases," "promoting good governance through cases," and urging stricter supervision, and in view of the new characteristics of corrupt behaviors reflected in the cases, such as "equity corruption" and "shadow shareholders," we have improved the regulatory system from multiple dimensions, including strengthening institutional supply and enhancing penetrative supervision. To adapt to the characteristics of power exercise after full implementation of the registration-based IPO system, we have focused on key powers such as policymaking, administrative approval, regulatory law enforcement, punishment and accountability to improve institutions and mechanisms and strengthen supervision and restraints on the exercise of public power. We have enhanced the transparency of supervision in a bid to promote supervision and standardization through openness and worked to eliminate the space for power rent-seeking from the source. We have implemented the central government's deployment on investigating both bribe taking and giving, and established a comprehensive mechanism for punishing bribe givers in the capital market to strengthen the deterrent effect of one-time bribe giving leading to restrictions everywhere.
Third, we enhanced the awareness of officials to not have the desire of corruption. The key lies in voluntary self-discipline. Every time the Disciplinary Inspection and Supervision Team stationed at the CSRC investigates a case, it conducts an in-depth analysis of the case's characteristics and specially produces a warning video for education. We worked together with the team and carried out warning education on a regular and comprehensive basis to deepen the use of cases to promote reform. In 2023, we collaborated with the team to build the first regular integrity education base in the CSRC system, and organized all cadres to receive on-site education by stages and in groups. Transparency is the best way to fight against corruption. We warmly welcome supervision from all parties in the market and all sectors of society. At the same time, we will always keep a clear mind, persist in fighting corruption, and get used to working under supervision of different parties.
Going forward, the CSRC Party Committee will work with the Disciplinary Inspection and Supervision Team stationed at the CSRC to effectively shoulder the political and primary responsibilities to conduct thorough and strict Party self-governance, improve Party conduct and build integrity, and prevent corruption, ensuring that Party self-governance becomes stricter, tougher and more effective. Thank you.
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China Securities Journal:
The Central Financial Work Conference emphasized the need to comprehensively strengthen financial supervision and effectively prevent and defuse financial risks. You just mentioned the opinions (tentative) on strengthening supervision of securities companies and public funds to accelerate construction of first-class investment banks and investment institutions. According to the opinions, what important measures should be taken to enhance supervision of sponsor institutions and make sure investment banks fulfil their responsibilities as "gatekeepers". Thank you.
Shen Bing:
Thank you for your question. The supervision and professional quality of sponsor institutions are the general concerns of business entities. As a supervisory body, the CSRC urges intermediaries including investment banks to fulfill their responsibilities and truly play their role as "gatekeepers." This is not only the deep expectation of investors, but also a critical element to improve the quality of listed companies at the source and to promote high-quality development of the market. Based on the opinions you just mentioned, I would like to introduce some relevant measures in supervision of institutions. The supervisory efforts can be summarized as implementing strict supervision, strengthening accountability and functions, and optimizing the ecosystem.
In terms of strict supervision, we have made it clear in the mechanisms and rules that problems such as "IPOs withdrawal after investigation" must be investigated to the end and the person responsible shall be held accountable. In daily supervision, we pay special attention to the prominent issues that are of great concern to the market such as relatively high withdrawal-and-rejection rate and dramatic changes in performance. We strictly implement the principle of "declaration means taking responsibility" and urge sponsors to effectively strengthen internal control and perform verification and inspection responsibilities. We also strengthen information sharing and coordination of supervision and law enforcement in on-site inspections to improve supervisory synergy and effectiveness.
In terms of strengthening accountability, Mr. Li Chao has just made some introductions. We must adhere to see-through supervision and comprehensive accountability, implement dual penalty for institutions and personnel, and make good use of qualification penalty and maximum punishment and other practices in accordance with the law. In particular, penalties will be increased for investment bank directors and senior executives who are responsible for violations to laws and regulations, even including general managers and companies' chairmen. In accordance with the law, we strictly investigate and deal with intermediaries and their employees suspected of committing serious illegal conducts, especially those involving facilitating fraud, and those suspected of committing crimes will be transferred to judicial authorities. We will truly and thoroughly implement the three-dimensional accountability system covering civil, criminal and administrative responsibilities.
In terms of strengthening functions, investment banks are urged to put functionality first, take it as their responsibility to serve the high-quality development of the real economy and protect the legitimate rights and interests of investors, strengthen the construction of core capabilities of investment banks, such as project screening and evaluation and pricing, and recommend truly high-quality companies to the market and investors while firmly blocking those problematic companies from the market.
In terms of optimizing the ecosystem, the professional quality of investment banks will ultimately be reflected in the quality of sponsored listed companies. We attach great importance to the existing classified evaluations of securities companies and the assessment mechanism of investment banking businesses, so that they can truly play their influencer role. In addition, we will improve the system for disclosing negative reviews of sponsor representatives to truly tighten reputation constraints. At the same time, we will strengthen supervision for the integrity of investment banks and their employees, and focus on fighting prominent problems such as improper shareholding and transfers of interests. We set up and improved the comprehensive disciplinary mechanism for bribers, so the black sheep in the sector can be rejected and restricted all around, creating a clean and healthy industry ecosystem. We will fully implement the spirit of the Central Financial Work Conference, pay close attention to the implementation of the opinions, further implement the requirements of intensifying efforts in supervision, and urge intermediaries to play their role as "gatekeeper," making sure listed companies are truly qualified. Thank you.
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Nanfang Daily, Nanfang+:
All parties abhor financial fraud practices in listed companies. We have noticed that the CSRC has repeatedly said that it will focus on preventing and cracking down on fraud. How will the CSRC intensify its crackdown on financial fraud of listed companies?
Guo Ruiming:
Financial fraud undermines the bottom line of the capital market, and must be cracked down on resolutely. The CSRC has a very firm attitude on this. In recent years, we have invested heavily in regulatory resources. Some of the cases that have attracted people's attention have reflected our efforts. However, frankly speaking, there is still a long way for us to go to meet the expectations of all parties in the market. Going forward, we will work with all regions and departments to strengthen synergy to build a comprehensive punishment and prevention system for cracking down on financial fraud, which mainly includes the following aspects:
Our top priority is to crack down on five types of illegal practices. The first is long-term and systemic fraud, and fraud involving third-party collusion. Targeting these practices, we will seriously investigate the responsibilities of scammers and their accomplices, and resolutely abolish the "ecosystem" of the fraud. The second is fraudulent issuance of stocks and bonds. We will resolutely block fraudsters from entering the capital market and firmly eliminate those who sneak inside. The third involves the abuse of accounting policies and accounting estimates to manipulate profits. The fourth is falsification through activities like financing trade. The fifth is the fraudulent actions that harm the interests of listed companies. These five types are where we will focus our efforts on.
Second, we will hold those responsible to account through comprehensive means in an all-round way. In addition to administrative punishment, we will also adopt a variety of disciplinary measures. For criminal cases, we will make full use of the institutional advantages of the public security and procuratorial organs stationed in the CSRC to jointly investigate and punish a number of typical and malignant cases. In terms of civil cases, we will implement a system of advance compensation, litigation support and commitment of parties involved in administrative law enforcement to compensate investors for their losses and significantly raise the cost of illegal activities. We will also launch more cases to solidify the results. We will resolutely ban those who are most responsible from market entry. Those who meet the standards for mandatory delisting due to major violations will be resolutely delisted.
Third, we will strengthen the internal control and defense lines of companies. An effective internal control system in listed companies is a crucial foundation for preventing systemic financial fraud. Therefore, our focus is on strengthening the functions of the company's board of directors, especially boards of auditors and independent directors in anti-fraud, thus leveraging the internal checks and balances in corporate governance. At the same time, we will encourage internal reporting, and we are exploring increasing the amount of rewards for reporting. Finally, we will strengthen the responsibilities of intermediaries as "gatekeepers." For those intermediaries that lose professional ethics or collude in fraud, we will resolutely impose severe penalties, including industry bans and other penalties. Moreover, we will urge the audit evaluation agencies to timely uncover and proactively report clues of financial fraud in listed companies. We will apply lenient or mitigated punishment in accordance with the law for those who proactively report. The purpose of these measures is to leave fraudsters with nowhere to hide. Thank you.
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Phoenix TV:
We have noticed that the documents mention strengthening the random selection of companies to be listed and intensify problem-oriented on-site inspections. What are the considerations behind this approach? What are the specific arrangements for the next step? Thank you.
Yan Bojin:
Thank you for your interest in IPO on-site inspection. On-site inspection is an administrative law enforcement measure granted to the CSRC by the Securities Law. In the field of issuance supervision, it serves as an extension and supplement to the written review for IPO applications. In January 2021, the CSRC issued and implemented the "Provisions on On-site Inspection of Initial Public Offering Companies," which stipulated the procedures, methods, and requirements for on-site inspections of IPO companies. Since the implementation of this system, the CSRC has mobilized resources across the entire system and conducted on-site inspections of 100 IPO companies in an orderly manner. Based on the inspection findings, the CSRC has taken various measures, including initiating investigation against three companies that were suspected of financial fraud in accordance with the law. Through rigorous on-site inspections, regulatory pressure has been transmitted to all levels, and the on-site inspection system has played a key role in improving the standardization of information disclosure and preventing financial fraud.
Recently, we have revised the "Provisions on On-site Inspection of Initial Public Offering Companies" based on our practical experience. One of the most important amendments, which has drawn considerable attention, is the clarification that companies withdrawing their listing applications during the on-site inspection process will still undergo thorough investigations. In other words, even if the listing application is withdrawn, we will still conduct the inspections, hold it accountable if necessary. This is to fundamentally address the issue of "withdrawing after inspection" that has occurred in some companies. At the same time, the new regulations have further improved on-site inspection procedures, introduced a mechanism for conducting inspections without prior notification, and emphasized unifying the standards for processing.
Next, we will significantly increase the proportion of on-site inspections. The primary consideration is to simultaneously increase the number of random sampling and problem-oriented on-site inspections, ensuring that the on-site inspection coverage rate is no less than one-third of the companies to be listed. For signs of fraudulent issuance and financial fraud discovered during on-site inspections, once verified, we will severely punish them. Through this approach, we will effectively deter those attempting to list companies with hidden issues, thereby improving the quality of listed companies from the outset. Thanks.
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Market News International:
The CSRC stepped up regulation on shareholding reduction last August, but it has not completely prevented major shareholders from implicitly liquidating shares at high prices after listing. I would like to ask what more stringent and specific measures will be introduced in the future to improve regulation on reductions by major shareholders. Thank you.
Guo Ruiming:
I will take this question. Next, we will comprehensively improve the regulations on shareholding reductions and prevent shareholders from implicitly reducing their shareholdings in accordance with the principle of substance over form. The main measures include: First, we need to clarify the reduction rules in cases such as divorce and dissolution of controlling shareholders. Second, we must clarify the reduction rules for scenarios like stock pledge liquidation and gifts. Third, we need to prohibit major shareholders, directors, and senior executives from engaging in derivative transactions involving the company's stocks, forbid restricted stocks from being used in refinancing and lending, and prevent shareholders with restricted stocks from selling securities. For illegal reductions of holdings, we will order the repurchase of stocks, pay the price differences, and impose severe penalties on those who refuse to correct their actions. Thank you.
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China News Service:
Just now, Mr. Li Chao mentioned that the CSRC is implementing strict standards for political integrity, capability development and disciplined conduct, comprehensively improving itself and promoting the high-quality development of the capital market. May I ask, in this regard, what are the key considerations and important measures of the CSRC? Thank you.
Zhang Chaodong:
Thank you for your question. the CSRC's work, including its self-improvement, has always received great attention from all sectors of society. There are many expectations and numerous suggestions that have been put forward. We listen to them carefully and strive to make improvements. On March 6, Wu Qing, chairman of the CSRC, emphasized at a press conference on economy, during the second session of the 14th National People's Congress, that strict supervision and management are essential. Strict management means strict self-discipline and strict control over our team. On the first day after the Spring Festival, the discipline inspection and supervision team stationed at the CSRC also held a special meeting to put forward strict supervisory requirements for strengthening the self-improvement of the CSRC. Through years of practice, we have deeply realized that the effectiveness of the CSRC's self-improvement is crucial for the overall situation of the reform, development and stability of the capital market. It also concerns the image and credibility of the CSRC.
To this end, we have thoroughly studied and comprehended the guiding principles of General Secretary Xi Jinping's series of important speeches, instructions, and directives. We have earnestly implemented the relevant requirements from the Office of the Central Financial and Economic Affairs Commission and the Central Financial Work Commission. Approaching self-improvement from a political standpoint, we have formulated specific opinions on comprehensively strengthening the self-improvement of the CSRC system.
During the drafting process of the opinions, we focused on the "three ones": The first is "one standard," which refers to the implementation of strict standards for political integrity, capability development and disciplined conduct. The second is "one goal," which is to provide a strong guarantee for high-quality development of the capital market. The third is "one orientation," which is to adhere to strictness as the priority, using rigorous management to promote stern supervision. Along with the rapid development of the capital market, the young team at the CSRC has been tested and has grown. However, we are also acutely aware that there is still a significant gap between the requirements of the CPC Central Committee and the expectations from a broad array of investors, and that some prominent issues exist. As vice chairman Li Chao just mentioned, we must be strict with ourselves and engage in self-revolution, confront substantive issues, deeply probe the ideological roots, maintain strict control and management with unwavering resolve all the way through, making great efforts to resolve these issues and to truly achieve a major transformation in thought, perspective and action. The opinions mainly propose the following key measures:
In terms of upholding the political nature and people-oriented focus of capital market regulations, we propose strong advancement in the building of political institutions and in the education and guidance of regulatory officials to uphold their original aspirations of serving the nation through finance and serving the people with finance. They must loyally fulfill the functions and duties entrusted by the Party and the state, carrying out all tasks with a sense of mission and responsibility. In the practice of strengthening regulation, preventing risks and promoting high-quality development, we must keep a firm political direction and persistently adhere to the people's standpoint.
In terms of strict management, we emphasize the need to continuously advance the normalization and long-term implementation of central inspections and rectifications, highlighting the governance of people, authority and affairs through systems. We observe a strict tone and measures, forming and consolidating a strict atmosphere. Issues such as the "revolving door" phenomenon between government and business, as well as "evasive resignations," have severely damaged the credibility of regulation and the healthy ecology of the capital market, attracting widespread criticism. Moving forward, we will address the fundamental issue raised by the discipline inspection and supervision team stationed at the CSRC, which is to diminish the "value of official status" for departing personnel. We will implement comprehensive measures from both ends of business and management, govern across the entire chain and deepen specialized rectifications.
In terms of strict supervision, we resolutely implement the requirement that supervision must be "sharp and thorny," with defined boundaries, reflecting the strict orientation in aspects such as stringent systems, enforcement and outcomes. Focusing on strict supervision, we optimize the regulatory system and enhance the guarantee of regulatory strength. Concurrently, we improve the supervisory capacities of our cadres, strengthen regulatory accountability and promote assertive regulatory actions.
In terms of changing work styles, we emphasize the need for practical actions and immediate execution, rigorously ensuring task implementation and resolutely rectifying pointless formalities, bureaucratism, hedonism and extravagance. We strictly investigate and deal with behaviors that violate the guiding principles of the central Party leadership's eight-point decision on improving work conduct and deeply promote exercising full and rigorous governance in compliance with the Party, improving Party conduct, building integrity and fighting corruption. We insist on in-depth investigation and research, to listen earnestly and respond sincerely to the market's concerns and doubts with a humble and cautious attitude, to make the utmost effort to solve prominent issues and to work wholeheartedly to build a positive image for the CSRC.
Self-improvement is an ongoing journey. Next, we will earnestly ensure the implementation of the opinions and with new achievements in our self-improvement. We will promote the high-quality development of the capital market. Thank you.
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Economic Daily:
What specific considerations has the CSRC made in enhancing the inclusiveness and adaptability of capital market regulatory rules, promoting improvements in the quality of listed companies, and better serving the development of new quality productive forces? Thank you.
Li Chao:
During this year's "two sessions," General Secretary Xi Jinping emphasized the importance of developing new quality productive forces in accordance with local conditions, during his participation in the deliberations of the Jiangsu delegation. The CSRC has earnestly studied the important instructions and requirements of General Secretary Xi. As for how to effectively leverage the role of the capital market to better serve the development of new quality productive forces, considerations have primarily been taken into account in the following areas:
First, from the source, which is in the aspect of IPOs, efforts are being made to enhance the inclusiveness, adaptability and precision support of new quality productive forces. However, basic offering standards must of course be maintained.
Second, for companies that have already been listed, leveraging capital market tools such as mergers and acquisitions, corporate restructuring and equity incentives is crucial to facilitate the development and growth of listed companies involved in new quality productive forces.
Third, it is important to further improve the multi-tiered capital market system, including areas such as venture capital funds, with the aim of continuously enhancing the quality and effectiveness of serving the development of new quality productive forces. Thank you.
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Yicai:
Mr. Wu Qing, chairman of the China Securities Regulatory Commission, stated at a press conference during this year's "two sessions" that enhancing the construction of the intrinsic stability mechanism in the capital market includes, at least, "one bedrock " and "five pillars." Among these, higher-quality professional services are one of the pillars. In the previously mentioned opinions regarding strengthening oversight over institutions, what are the key measures for promoting the securities and fund institutions to better play their roles to provide higher-quality services? Thank you.
Shen Bing:
Thank you for your question. In our recent announcement regarding the strengthening of regulation for securities firms and public funds, and the accelerated cultivation of first-class investment banks and institutions, we have outlined the development goals for the securities and fund industry. Specifically, we have identified 25 key measures, focusing on phased tasks for the next five years. These measures provide a timetable, roadmap and blueprint for expediting the cultivation of first-class investment banks and institutions. Allow me to provide a brief overview:
First, we aim to rectify the positioning of institutions in the industry. There are gaps in terms of operational concepts, functional effectiveness, governance levels, compliance awareness and other aspects within the institutions in the industry according to the requirements set forth in the Central Financial Work Conference for cultivating first-class investment banks and institutions. The issuance of the opinions this time emphasizes the need to strengthen the leadership of the Party. Through measures such as improving classification evaluation and risk control indicator systems, institutions in the industry are urged to rectify their operational concepts and prioritize functionality, while consistently adhering to the development principle of financial services for the nation and the people.
Second, we aim to enhance corporate governance. Sound and robust corporate governance and compliance risk control are crucial for financial institutions. The opinions systematically put forward requirements for the governance framework of institutions in the industry. For instance, the document highlights the need for a clear equity structure, streamlined organizational structure, well-defined responsibilities, comprehensive information disclosure, reasonable incentive and restraint mechanisms, effective internal controls, and an architectural framework conducive to fostering ethical conduct within the industry. Additionally, institutions in the industry are required to improve mechanisms for preventing conflicts of interest such as related-party transaction management. For high-risk businesses, the principle of "if it cannot be properly supervised, it should not be conducted" should be adhered to. It is essential to enhance assessment mechanisms for compliance risk control and implement the requirements of comprehensive risk management and compliance management across organizations.
Third is to promote cultural progress. In recent years, some practitioners in the sector have led lavish lifestyles, seeking short-term successes and quick profits while flaunting their wealth. Such harmful trends severely damaged the reputation of the sector. Now "The Opinions" urges related financial institutions to vigorously advocate and implement the five financial ethics of Chinese characteristics, which are being honest, fulfilling social responsibilities, exercising prudence, innovating while upholding traditional values and abiding by the law. Vetting and regulation procedures should be strengthened in key processes such as enrollment and appointment. Practitioners with unlawful or immoral behaviors should be removed from the sector with firm resolve. Supervisory bodies should enhance accountability and punitive measures, improve information disclosure regarding penalties and better utilize practitioners' credit records, so as to legally and rigorously prevent law-breaking personnel from continuing to work in the profession. In collaboration with other departments in charge of related work, the supervisory bodies should also continue to improve the salary management system for the sector. Different parties should poll strengths to quickly create an environment of strict disciplines for industry practitioners in order to maintain a good reputation of the sector.
Fourth is to level up the capacity for providing professional services. This is key to cultivating top-notch investment banks and other investment institutions. "The Opinions" urges related financial institutions to focus on their primary responsibilities and core businesses, fulfil their important roles in ensuring stable and sound performance of the financial market, in discovering value and curbing risks; in facilitating inflow of medium and long-term capital to the market, in improving long-term returns for investors and in supporting high-standard opening up of the financial market. For this purpose, we will provide oversight and recommend to related financial institutions that they strengthen core capabilities, optimize financial services and product supplies and provide products and services that truly suit investors. Also, we will offer support to realize the strategic plans that promote technology-related financing, green financing, inclusive financing, pension financing and digital financing. Thank you.
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Shou Xiaoli:
Due to time limitations, we will have one last question.
ThePaper.cn:
Investors buy stocks to invest in listed companies. Can you discuss the measures to be taken by the CSRC to elevate the investment values of listed companies and improve sense of gain for investors? Thank you.
Guo Ruiming:
Thank you for your question. Listed companies comprise the cornerstone of the capital market. In recent years, the overall performance of listed companies has improved. However, we still have a long way to go in terms of increasing investment values and boosting investors' sense of gain. Our efforts will mainly focus on three aspects:
First, we will encourage listed companies to pay attention to investors' returns. Listed companies are the best performers in different sectors. They should act like best performers and provide more benefits to investors, because this is the only way to attract and keep investors engaged. Next, we will formulate guidance for market value management of listed companies, guiding major index stocks to be more willing to benefit investors. We will also push relevant departments to include listed companies' work in improving investment values and market value management into the internal and external examination and appraisal systems, so that best performing listed companies can set good examples and play a guiding role. For companies with stock prices lower than net values, we will offer oversight and urge them to come up with measures for improving investment values.
Second, we will push more listed companies to pay dividends and buy back their shares. For companies that haven't paid dividends or have only paid extremely small amounts of dividends for years, we will issue warnings and urge them to pay dividends, with other criteria being considered as well. We will also push best performing companies to pay dividends more than once a year with consideration of half-year reports and third-quarter reports, thus to improve investors' sense of gain. Meanwhile, we will offer guidance and support for more listed companies to buy back their shares and encourage cancellation after repurchase, because this is another issue investors pay attention to.
Third, we will support companies to cement fundamentals. As Mr. Li just mentioned, we will support the mergers and acquisitions of listed companies as well as corporate restructuring, encouraging listed companies to improve performance through capital market tools such as equity incentives so they can excel and strengthen. We will also offer oversight and urge listed companies to improve communication with investors and learn more about investors' demands. Competitive products need effective promotional efforts just the same. So, listed companies should do a good job in managing relationships with investors and take proactive measures to stabilize investors' expectations.
Last but not least, strict regulation will be implemented on backdoor listings and reckless conglomerate mergers. We will also resolutely crack down on speculative behaviors surrounding backdoor listings, so the principle of survival of the fittest can be better exerted and a healthier ecosystem can be created in the sector. Thank you.
Shou Xiaoli:
Thanks to all speakers and journalists for attending this press conference. It is hereby concluded.
Translated and edited by Wang Yiming, Wang Qian, Xu Xiaoxuan, Wang Ziteng, Yuan Fang, Liu Sitong, Yan Bin, Zhang Tingting, Li Huiru, Yan Xiaoqing, Zhang Rui, Liu Caiyi, Huang Shan, Ma Yujia, David Ball, Rochelle Beiersdorfer and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.
