Understand and implement the central guidelines to promote the sustained and healthy development of enterprises.

Recently, the State Council issued the “Opinions of the State Council on Further Enhancing the Quality of Listed Companies” (hereinafter referred to as the “Opinions”), which set forth 17 key measures across six areas to strengthen regulation of listed companies.

The “Opinions” state that it is necessary to strengthen the foundational institutional framework of the capital market and substantially enhance the quality of listed companies. Adhering to a balanced approach that emphasizes both existing and newly listed firms and combines addressing symptoms with tackling root causes, the document calls for leveraging the concerted efforts of all stakeholders, reinforcing ongoing regulatory oversight, optimizing the structure and development environment of listed companies, and ensuring marked improvements in corporate governance standards, continuous enhancement of information disclosure quality, effective resolution of salient issues, and significant gains in sustainability and overall quality. These measures will provide robust support for building a capital market that is well-regulated, transparent, open, dynamic, and resilient, thereby fostering high-quality economic development. The issuance of these “Opinions” signifies that the nation’s initiative to elevate the quality of listed companies has entered a new phase.

Key Point 1: Enhancing Corporate Governance of Listed Companies

According to the Opinions, it is necessary to refine corporate governance rules and regulations, clearly delineating the respective duties and legal liabilities of controlling shareholders, actual controllers, directors, supervisors, and senior management. Channels and mechanisms for institutional investors to participate in corporate governance should be improved, and the bottom-line requirements for listed-company governance should be strengthened while best practices are promoted. Disclosure of governance-related information should be enhanced to facilitate more informed and scientifically sound decision-making and management. Special campaigns on corporate governance should be launched, employing self-assessments by companies, on-site inspections, and follow-up on corrective actions to effectively elevate the level of corporate governance. It is understood that, going forward, the CSRC will regard strengthening corporate governance as a key priority both in the immediate term and over the longer term, including refining governance rules and regulations for listed companies, reinforcing bottom-line governance requirements, promoting best practices in corporate governance, and enhancing disclosure of governance-related information.

Key Point 2: Promote the optimization and strengthening of listed companies.

According to the Opinions, the securities issuance registration system shall be comprehensively implemented in a phased manner; high-quality enterprises shall be supported in going public; systems governing asset restructuring, acquisitions, and spin-off listings of listed companies shall be improved; and more eligible foreign investors shall be permitted to make strategic investments in listed companies. Coordination and balance between the financing and investment sides of the capital market shall be strengthened to attract more medium- and long-term capital into the market. Incentive and restraint mechanisms for listed companies shall be refined and improved.

Improve systems related to asset restructuring, acquisitions, spin-offs and listings, and subsequent refinancing. Since the beginning of this year, the China Securities Regulatory Commission has successively issued documents such as the “Decision on Amending the Measures for the Administration of Securities Issuance by Listed Companies” and the “Decision on Amending the Measures for the Administration of Major Asset Restructuring of Listed Companies.” With regard to the “Opinions’” provision allowing more qualified foreign investors to make strategic investments in listed companies, industry insiders note that specific implementation measures still need to be promulgated.

Key Point 3: Improving the Exit Mechanism for Listed Companies

According to the Opinions, it is necessary to refine delisting standards, streamline delisting procedures, strengthen regulatory oversight, rigorously crack down on malicious attempts to circumvent delisting, and impose stricter accountability for violations of laws and regulations. At the same time, diversified exit channels—such as voluntary delisting, mergers and acquisitions, corporate restructuring, and bankruptcy reorganization—should be facilitated. Relevant regions and departments are required to adopt a comprehensive package of measures to promote the orderly resolution of risks.

The “Opinions” will help accelerate the refinement of exit mechanisms and address the longstanding issue of “zombie” and “shell” companies lingering in the capital market. Going forward, we should capitalize on the momentum to further improve the systems for mergers and acquisitions, restructurings, and bankruptcy reorganization, thereby facilitating the orderly exit of listed companies through multiple channels. At the same time, we must strengthen the information-disclosure and notification system for delistings, enhance information sharing and regulatory cooperation with local governments and other relevant parties, and effectively guard against and constrain any potential obstacles that may arise during the delisting process. In addition, we should intensify oversight of delistings and impose severe penalties on entities that circumvent delisting through illegal and non-compliant practices such as financial fraud, transfer of benefits, and market manipulation, ensuring that such misconduct is rigorously addressed and eliminated.