Study On The Compulsory Delisting System Of Listed Companies In China

Compulsory delisting of listed companies can clear poor quality companies that do not meet listing standards from the securities market.A perfect compulsory delisting system is an important guarantee to advance the process of the registration system reforms,stimulate the vitality of the securities market and promote the smooth operation of the capital market.After nearly thirty years of development,China’s mandatory delisting system for listed companies has formed a legal system consisting of laws,regulations and other regulatory documents with the Securities Law as the core and the Rules for Listing of Stocks on the Shanghai Stock Exchange and the Rules for Listing of Stocks on the Shenzhen Stock Exchange as the specific operating rules.However,in practice,due to the implementation of the approved system for many years,the value of shell resources is scarce,and listed companies often use various illegal and illegal means to avoid being forced to delist,leaving a large number of poor quality companies on the securities market,encroaching on the resource elements that belong to high-quality listed companies,and causing serious infringement on the legitimate rights and interests of the majority of investors.Therefore,in order to improve the delisting efficiency and combat the malicious avoidance of delisting of listed companies,as well as to match with the reform of registration system and to smooth the "exit" of the securities market,a strict delisting system must be established.The contract theory and the life cycle theory are the premise and foundation for the construction and improvement of the compulsory delisting system.By combing through the history of the delisting system,we find that China’s delisting system has the historical problem of a "low delisting rate",which hinders the healthy development of the securities market.By summarizing the current delisting system,we conclude that China’s current delisting system is both progressive and problematic.The progress is that: the delisting rules are more operational;the delisting criteria are more reasonable,and the delisting process is more simplified.The problems are: the design of mandatory delisting standards is not perfect,delisting standards still need to be refined,the role of the risk warning system is limited;delisting follow-up trading channel is single and poor,the lack of a strict information disclosure system,information disclosure review is not timely and the penalty for non-compliance disclosure is low;after delisting,small and medium-sized investors have difficulties in defending their rights,it is difficult to obtain compensation under the litigation path,group litigation needs to be improved,the non-litigation path of early payment system The effective mechanism has not yet been formed.Strengthening delisting standards is the most important part of improving the compulsory delisting system,and abolish the risk warning system which has limited effect.Facing the problems of trading channels after delisting,we should improve the liquidity of the New Third Board market to smooth the delisting channels,and improve the diversified delisting channels to ensure the development needs of delisted companies and compensate for the losses of investors.Conduct continuous information disclosure review and further strengthen the penalties for illegal information disclosure.Finally,we will establish a system of administrative forfeiture for investor redress,optimize Chinese-style group litigation,and improve the early payment system to achieve effective compensation for small and medium-sized investors’ losses.