Institutional safeguard of healthy development of capital market
On Friday, the State Council released a guideline for the highquality development of the capital market, which is the third guideline document issued on the nation’s capital market in the past two decades, following the ones in 2014 and 2004. It is focused on creating a safe, standardized, transparent, open, dynamic, and resilient capital market. It proposes development goals for the capital market to the middle of this century. It also makes systematic deployments in areas such as investor protection, the quality of listed companies, the development of industry institutions, regulatory capabilities and governance system construction.
The guideline sets out detailed deployments for building a comprehensive capital market regulatory system and implementing full-chain supervision. For example in the issuance sector, it requires further improvements to the issuance and listing system, strengthening the responsibility throughout the entire chain of issuance and listing, increasing the supervision on issuance and underwriting, and strictly controlling access to issuance and listing.
The guideline also emphasizes strengthening the continuous supervision of listed companies, stresses the establishment of a comprehensive punishment and prevention system for preventing and combating fraud in the capital market, and seriously rectifying illegal behaviors in key areas such as financial fraud and misappropriation of funds. For example, the guideline pays attention to protecting the legitimate rights and interests of relevant investors when a company delists, improving the compensation and relief mechanism for investors during the delisting process, and requires controlling shareholders, actual controllers, directors, senior executives, and others responsible for major illegal delistings to compensate investors for their losses according to the law. On stabilizing market transactions and development, the guideline also proposes building strategic reserve and stabilization mechanisms, and enhancing the inherent stability of the capital market.
After the release of the guideline, relevant departments have successively introduced some supporting measures and regulations, and it is believed that the revision of laws and regulations is also underway. The policy system will provide protection for the healthy development of the capital market and the interests of investors like a net, helping to address the deep-seated contradictions accumulated in the capital market over the long term and accelerating the construction of a safe, standardized, transparent, open, dynamic and resilient capital market.