Research On Minority Investors Protection In Compulsory Delisting Of Listing Corporations

At the end of 2020,Rules Governing the Listing of Stocks issued by Shanghai and Shenzhen Stock Exchanges has detaild and completed delisting indexes and process,accelerating the formation of delisting as a normal practice.The New Delisting Rules truly reflects the survival of the fittest in the capital market.Strict implementation of compulsory delisting can not only eliminate the black sheep in the market,but make relevant minority investors suffer significant pecuniary losses.Minority investors are the source of living water in our securities market and footstone of the existence and development of modern corporations.To Protect the lawful rights and interests of minority investors should be the primary consideration in the process of compulsory delisting of listing corporations.The paper focuses on the deficiencies and improvement of compulsory delisting and investor rights remedy system in China.Chapter 1 states the basic concept of compulsory delisting of listing corporations around the cancellation of listing suspension in new Securities Law,It proves that listing corporations conclude an incomplete contract with investors and the New Delisting Rules issued by the stock exchange for the supervision and management of listing corporations is a mandatory contract that listing comporations must comply with.Chapter 2 indicates the main content and effect of the compulsory delisting of listing corporations in the New Delisting Rules and the problems existing in the protection of minority investors,believing that progress has been achieved and stability ensured in delisting as a normal practice in our country.Meanwhile,this chapter also lists the administrative responsibilities of listing corporations and the ’vital few’ for respectively violating the old Securities Law and the new one,showing that illegal cost in the capital market has increased highly.However,in compulsory delisting,the stock price delisting index,which is easily avoided by junk stocks,has no exemption for blue chips.Advance Compensation can timely and effectively compensate investors for their losses,but it still includes these problems,incomplete compensation subjects,lack of effective incentives,and difficulties in subsequent recovery.Special Representative Action can solve disputes once and for all.However,due to Ordinary Representative Action brought in advance and limited resources of investor protection institutions,the Chinese version of securities class action has been still in a pilot phase.Chapter 3 is mainly about some suggestions on enhancing compulsory delisting of listing corporations and relief of rights and interests of minority investors after delisting.Above all,we can benefit from the average price standard of the U.S.stock market and use the current delisting review procedure as a buffer mechanism.Next,reform Advance Compensation entirely.Other jointly liable debtors who have not participated in Advance Compensation shall be allowed to raise a defense to payments which exceed real damages of investors.Based upon the experience from developed capital markets,Investor Protection Fund can be added into Advance Compensation which might to be linked up with Securities Administrative Compromise.And we should have guaranteed the priority order of performance of recover debts.Eventually,it’s high time that we made Special Representative Action efficient.Investor protection institutions which should be actively set up more are supposed to bring an action directly and have an independent right to select cases whose choice criteria must be made clear.Then,those lawyers who provide pro bono legal aid ought to be rewarded with financial incentives.