A CSRC deputy director, Sun Nianrui, spoke at the China Southern Finance International Forum, and emphasized that the regulatory body plans to roll our corporate governance disclosure requirements for listed companies, according to Sina on November 28. The new system would require such companies to integrate a baseline of corporate governance standards in their business, but no other specifics were given. The requirements should come in the next one to two years and will entail two rounds of disclosure.
A few other talking points that Nianrui focused on was establishing a more efficient process for companies to delist should they carry too many non-performing assets, and also reducing financial fraud among companies. With the establishment of the STAR Market in 2019, which has a NASDAQ-like registration-based process as opposed to an approval-based process, listing in China has been much faster. CSRC now is focusing on creating a smoother delisting process for questionable companies that underperform either financially, have dubious governance practices, or perform poorly in other ESG areas.
The Mainland currently has almost 4,100 listed companies with a market value of more than RMB80tr. These companies make up only one in ten companies in China, but their profits make up almost 50% of the nation’s regulated businesses. Naturally, financial regulators are continuously seeking channels to improve operation of domestic markets, and with an additional trading board, policymakers are looking beyond financial indicators to reduce risks, such as governance. Moreover, CSRC reportedly will soon publish fleshed out ESG requirements by year end, or the beginning of 2021.