Study On The Delisting System Of The Public Offering Securities Investment Fund

This paper studies the delisting system of the public offering securities investment fund.The text is divided into five parts:The first part studies the general theory of the delisting system of the public offeringsecurities investment fund. This section briefly introduces the relationship between the marketexit of the securities investment fund and the delisting of the fund, the classification of thefund delisting, the ways in which the fund delists and the basic principle we shall adhere towhile building up the delisting system of the fund. The market exit of the securitiesinvestment fund and the delisting of the fund have a inclusion relation. Based on differentstandards, the fund delisting can be classified as voluntary delisting and compulsory delisting,formal delisting and semi-delisting. By means of liquidation, merger and changing the methodof fund operation, the fund can delist from the exchange. While building up the delistingsystem of the fund, we shall adhere to four basic principles, including respecting economicfreedom while reducing administrative intervene, refusing to regard the compulsory delistingas a measure of punishment, emphasizing investor protection and remedy, and enriching thecontent of the delisting system.The second part studies the delisting standards of the public offering securitiesinvestment fund.Voluntary delisting standards are characterized with non-uniformity. Although voluntarydelisting has no unified and explicit standards, the fund may by itself determine the specificdelisting standards by standard-determining procedures. Stipulating the delisting in the fundcontract and making a decision of delisting by the fund shareholders’ meeting are the twokinds of standard-determining procedures of Voluntary delisting. When we interpret the bothtwo existing standard-determining procedures, we should not limit their meanings to theliteral ones. Instead, they should be construed in a way of enlarging interpretation. As long asthe relevant stipulations in the fund contract or the relevant decisions made by the fundshareholders’ meeting may substantially result in the delisting of the fund, we can regard themas the fund’s voluntary delisting standards. The content of compulsory delisting standards can be divided into two parts includingthe standards system of compulsory delisting on the macro level and the specific delistingstandards of compulsory delisting on the micro level. In China, compulsory delistingstandards only regulate the fund’s termination of listing. The categories of the specificstandards of compulsory delisting are single, showing that the funds’ semi-delisting systemhas not yet been built up. The exiting compulsory delisting standards in China only includesthat the fund no longer meets the conditions for listing, that the valid term of the fund contracthas not been extended upon expiration without the approval of regulatory department, andother circumstances under which the listing shall be terminated as stipulated provided for inthe listing rules of the fund shares. The content of the standards is obscure, lacking ofoperability. Considering that the compulsory delisting standards have much drawback, Chinashould build up the fund’s semi-delisting system which includes the fund’s delisting riskwarning system and the fund’s suspension system, detail the delisting standards and make theprovision of law explicit while adding five new standards into the law of the fund includingthat the number of the fund share is too small, that the net value of the fund share is too low ordrops excessively, failures to perform an obligation of information disclosure, breaches of thelisting agreement and obtaining listing qualification by fraud.The third part studies the delisting procedures of the public offering securities investmentfund.The fund’s voluntary delisting shall follow the relevant procedure. Firstly, whenconditions under which the listing shall be terminated as stipulated in the fund contract occuror the fund shareholders’ meeting is going to decide whether or not delist the fund, the fundmanager shall inform the securities exchange and make an announcement. Secondly, theresolution by the fund shareholders’ meeting to delist the fund shall follow the legal procedureand the decision to determine a way in which the fund delists shall be made. Thirdly, the fundmanager applies to the securities exchange for delisting and reports to the securitiesregulatory department for archival purposes. Then, the fund manager makes a delisting notice.At last, the manager makes liquidation of the fund property or reorganizes the asset in a pre-determined way.The fund’s compulsory delisting system includes the fund’s delisting risk warningsystem, the fund’s suspension system of listing and the fund’s termination system of listing. When the fund is exposed to the risk that is likely to be terminated from listing, thesecurities exchange will give its delisting risk warning. The fund has the right to raise anobjection. When the objection is not accepted, the fund shall make a notice that it has beenwarned of the delisting risk.When conditions that may result in the fund’s suspension occur, the securities exchangewill make a decision to suspend the listing of the fund. If the fund is dissatisfied with thedecision of suspension, it has the right to apply to the securities exchange for a hearing. If thesecurities exchange uphold its decision after the hearing, the fund is entitled to apply to theExchange’s Listing Committee for review after which the decision is the final decision. Thefund shall publish an announcement of the suspension. If the fund is still dissatisfied, it isentitled to bring an lawsuit to the court.The procedure of the fund’s termination of listing is similar with the procedure of thefund’s suspension of listing. But the difference is that when the decision of the fund’stermination of listing goes into effect, the fund shall convene the fund shareholders’ meetingto decide the way of the fund’s market exit.The fourth part studies the delisting supervision of the public offering securitiesinvestment fund. In China, the supervisor in the fund delisting is the securities exchange andChina Securities Regulatory Commission (CSRC). The securities exchange is the front-lineregulator who specifically supervises the fund delisting and has the decision-making power.CSRC doesn’t directly regulate the fund delisting. Instead, it indirectly supervises the funddelisting at macro level by legislation, ratifying rules relevant to fund delisting andsupervising the securities exchange. Besides, this section also points out the idea that shall befollowed in the fund delisting supervision that we shall regard self-regulation as the main wayand administrative supervision as the supplementary means while reducing administrativeintervention with full respect for the laws of market economy.The fifth part studies the remedy for investors in the delisting of the public offeringsecurities investment fund. We should improve the responsibility assigning mechanismrelevant to damages to interests of investors in the fund delisting. In particular, the infringer’sassumption of corresponding civil liability can greatly strengthen the protection of theinterests of investors.