According to a report by China News Service on June 5, citing the Shenzhen Stock Exchange’s official website, the exchange publicly solicited comments from all sectors of society from May 8 to 22 this year on the “Rules for Listing Stocks on the ChiNext Board of the Shenzhen Stock Exchange (Draft for Comments)” (hereinafter referred to as the “Listing Rules”). Based on the feedback received from various sectors of society, the “Listing Rules” have been revised and improved. Specifically, three provisions—including enhanced disclosure requirements related to core technologies—have been added, and seven provisions have undergone revisions.

I. Overall Situation of Feedback on the Listing Rules

During the period for soliciting comments, our institute received a total of 153 feedback emails. Meanwhile, on May 10 and May 11, our institute convened two symposiums, bringing together professionals from selected local securities regulatory bureaus, sponsor institutions, accounting firms, law firms, as well as market participants including listed companies, companies planning to go public, and venture capital firms. We also specifically sought input from those sponsor institutions, law firms, and accounting firms that did not attend the symposiums.

Overall, all sectors of society have given the “Listing Rules” a high degree of recognition. They believe that the “Listing Rules,” tailored to the realities of China’s capital market—characterized by its “emerging yet transitioning” nature—as well as the specific features of start-up enterprises, have strengthened the standardized operating mechanisms, risk disclosure mechanisms, and survival-of-the-fittest mechanisms of the ChiNext market. The rules place great emphasis on enhancing market efficiency, leveraging the role of market-based constraints, and safeguarding investors’ interests. At the same time, various sectors of society have also put forward specific comments and suggestions regarding the “Listing Rules.” Our firm has systematically organized, summarized, and categorized all the feedback received, ultimately identifying 135 comments grouped into nine categories. Among these, the comments related to the “Listing Rules” primarily fall into the following categories:

First, regarding the strengthening of corporate governance: it is recommended to add provisions that ensure the proper performance of duties by independent directors; and to require stricter declaration and reporting requirements for directors, supervisors, and senior executives.

Second, regarding the improvement of information disclosure: it is recommended to strengthen the requirements for disclosing information related to core technologies; to add a requirement that directors, supervisors, and senior management personnel of listed companies must ensure that the information disclosed by the company is timely and fair; to introduce a requirement prohibiting insiders with access to material nonpublic information from advising others to buy or sell securities; to suggest that there is no need to suspend trading on the day the shareholders’ meeting is held; to further clarify the scope of external investments; and to recommend abolishing quarterly reports and the like.

Third, regarding share lock-up and management: It is recommended to impose a lock-up period on shares held by core technical personnel, sales staff, and management personnel.

Fourth, regarding the resumption of listing: It is recommended that the net profit indicator for resuming listing should exclude non-recurring gains and losses.

Fifth, regarding the responsibilities of accountants: It is recommended to add more restrictive provisions for accounting firms.

Sixth, regarding the sponsor institutions: It is recommended to consider whether the ongoing supervision period for sponsor institutions needs to be adjusted, whether they should issue independent opinions on significant ad-hoc reports, and whether there is an appropriate alignment between the sponsor’s responsibilities and their associated benefits.

II. Key Amendments to the Listing Rules

I have carefully studied and thoroughly considered the feedback received above, incorporated the majority of the suggestions, and made revisions and improvements to the Listing Rules. Among the 135 pieces of feedback from various sectors of society, 71.2% of the comments related to the Listing Rules were either adopted or given follow-up arrangements; 18.4% have already been reflected in the Listing Rules themselves; and only 10.4% were not adopted for various reasons. The overall framework of the revised Listing Rules remains unchanged, with three new provisions added, seven provisions amended, and several textual adjustments made.

(1) The 3 additional clauses

1. Add provisions regarding the protection of independent directors’ performance of duties, requiring listed companies to provide independent directors with the necessary working conditions.

To emphasize that listed companies should provide the necessary conditions for independent directors to effectively exercise their duties and ensure that independent directors truly play their role, Article 3.1.15 is added to Section 1 of Chapter 3 of the Listing Rules, stipulating: “Listed companies shall ensure that independent directors enjoy the same right to information as other directors and provide the working conditions necessary for independent directors to perform their duties. When independent directors exercise their powers, relevant personnel shall actively cooperate and shall not refuse, obstruct, or conceal any information; nor shall they interfere with the independent exercise of powers by independent directors.” This article sets forth the general principles regarding the conditions that listed companies should provide, and these principles will be further elaborated in the relevant supporting guidelines.

2. Add binding provisions for accounting firms.

To further strengthen the oversight of accounting firms, in addition to the existing regulatory and disciplinary measures for securities service institutions and their relevant personnel as set forth in the Listing Rules, Article 6 of the Listing Rules has been supplemented with a new provision: “Certified Public Accountants responsible for auditing the periodic reports of listed companies shall strictly adhere to the Code of Professional Ethics for Chinese Certified Public Accountants and the Quality Control Standards for Accounting Firms. They must not allow any conflicts of interest to compromise their objective and impartial stance or to issue inappropriate or misleading audit reports. Nor may they unreasonably delay audit work, thereby jeopardizing the timely disclosure of the company’s periodic reports.” (Article 6.7)

3. Add a separate clause to strengthen the disclosure requirements for content related to core technologies.

The ChiNext Board serves innovative, independently developed enterprises as well as other growth-oriented start-ups. Changes in core competencies, including core technologies, can have a significant impact on a company. To further strengthen the disclosure requirements related to core competencies and other key competitive strengths, Article 11.11.5 has been added to Section 11 of Chapter 11 of the Listing Rules: “If a listed company encounters any of the following circumstances that pose a significant risk to its core competitiveness, it shall promptly report to and disclose such circumstances to this Exchange: (1) A material adverse change occurs in the acquisition or use of the company’s important assets or technologies, such as trademarks, patents, proprietary technologies, or franchise rights; (2) Key personnel of the company’s core technology team or critical technical staff—individuals who significantly influence the company’s core competitiveness—resign or undergo substantial changes; (3) The company’s core technologies, critical equipment, or business models face the risk of being replaced or phased out; (4) The company abandons continued investment in or loses control over important core technology projects; (5) Other significant risks to core competitiveness identified by this Exchange or the company itself.” This provision consolidates the content previously scattered across Item (10) of Article 11.11.2 and Item (7) of Article 11.11.3.

(II) The 7 amended provisions

1. According to Article 3 of the “Administrative Measures for Information Disclosure by Listed Companies” issued by the China Securities Regulatory Commission, add to Article 2.2 of the “Listing Rules” the requirement that directors, supervisors, and senior management personnel of listed companies shall ensure that the information disclosed by the company is timely and fair.

2. Add a requirement that insiders who possess material nonpublic information shall not recommend others to buy or sell securities, and revise the relevant content of Article 2.7 to read: “and undertake not to buy or sell, nor to recommend others to buy or sell, the company’s shares and their derivative products prior to the announcement of such information.”

3. Amend Item 1 of Section 3.1.2 to read: “The situation of direct and indirect holdings of the company’s shares.” This further clarifies that directors, supervisors, and senior executives must disclose both their direct and indirect holdings of the company’s shares.

4. Amend Article 3.1.10 to clearly stipulate that directors, supervisors, and senior management personnel must also report to our firm and apply for a lock-up of the shares they hold upon leaving their positions.

5. The wording in Article 3.2.6 regarding the appointment of the board secretary—“If the Exchange does not raise any objection within five trading days from the date of receipt of the relevant materials, the board of directors may appoint the secretary”—is amended to read: “If the Exchange does not raise any objection within five trading days from the date of receipt of the relevant materials, the board of directors may appoint the secretary in accordance with the statutory procedures.”

6. Amend Article 9.1 to further clarify the scope of outbound investments, including entrusted wealth management, entrusted loans, investments in subsidiaries, associated enterprises, and joint ventures, as well as investments in financial assets held for trading, financial assets available for sale, and held-to-maturity investments.

7. Amend Article 17.1 to read: “This Exchange shall exercise supervision over the regulated entities specified in Article 1.5 of these Rules. Specific supervisory measures include: (1) requiring explanations and clarifications; (2) requiring intermediary agencies or companies to engage intermediary agencies to conduct verification and issue opinions; (3) issuing written warnings (including various notices and letters); (4) conducting interviews and discussions; (5) revoking qualification certificates for office positions; (6) temporarily refusing to accept documents submitted by the parties concerned; (7) imposing trading restrictions; (8) reporting to the China Securities Regulatory Commission; (9) other supervisory measures.” This amendment is consistent with the “Implementation Details for Self-Regulatory Supervision and Disciplinary Measures of the Shenzhen Stock Exchange (Trial)” to be issued by our Exchange.

In addition, we have made adjustments to the wording of several provisions in the Listing Rules to make the language more precise and clear.

Regarding other important issues raised in the feedback—such as imposing share-sale restrictions on core technical personnel, sales staff, and management personnel; adding more content on product R&D and technological innovation to periodic reports; whether to lift the trading halt on the day of the shareholders’ meeting; and whether to eliminate quarterly reports—I believe, after careful and repeated deliberations, that some of these suggestions should be gradually studied and refined in light of market developments and the maturation of relevant conditions before being incorporated into the Listing Rules. As for other suggestions involving specific operational aspects related to information disclosure and standardized practices, we plan to incorporate them into the relevant supporting guidelines.

In addition, the feedback also touched upon issues such as issuance review and pricing, trading rules and the setting of trading access thresholds, imposing fines on shareholders who violate the rules, and mandating listed companies to increase their dividend payout ratios. After careful consideration, we believe that the aforementioned comments do not fall within the scope regulated by the Listing Rules, and we will forward these comments to the relevant parties for further study.