China Securities Regulatory Commission sets new guidelines for share reduction to build a strong foundation for long-term market stability_Sichuan Online

The China Securities Regulatory Commission issues new regulations to control share reductions

Xinhua News Agency Beijing, May 25 (Xinhua) — On May 25, the China Securities Journal reported that the China Securities Regulatory Commission has issued new rules governing stock discounting to strengthen the inspiration of long-term market stability. The regulations, formally titled “Temporary Measures to Control Share Dilution by Shareholders of Listed Companies,” were issued on May 24 in response to the need for additional share dilution management.

The new rules, often called “Management Measures to Reduce Bycatch,” aim to address remaining challenges in monitoring the stock discount. These include provisions similar to pre-disclosure requirements for major shareholders reducing their holdings, limits on how quickly share holdings can be reduced every three months, and restrictions on pre-IPO shares. The aim is to regain management of the main shareholders and stop any habits that may result in market instability.

Industry insiders see these rules as the strongest measures to regulate stock discounting in the past. The release of these funds is expected to reduce the risk of a massive market sell-off and improve long-term market stability.

One key aspect of the rules is that they have been introduced under this type of rules for the first time, which signals an improvement under the authorized framework for lowering shareholdings. The rules additionally provide clear guidelines for disposing of investments and aim to deter any habits that could harm buyers’ aspirations.

The regulations additionally provide for measures to prevent major shareholders from diluting dividends, as this may have a significant impact on the efficiency of the organization. The guidelines set limits on massive share reductions for multiple classes of shareholders and emphasize the importance of maintaining transaction transparency.

Moreover, the rules aim to block any channels that could be used to “divert and mitigate” the action. By tightening rules on shareholder ownership, buying and selling strategies, and various tools, the rules aim to reduce the likelihood of circumvention of stock discounting restrictions.

Tian Lihui, director of the Financial Development Institute of Nankai University, believes that the issuance of these rules will result in optimistic changes in the ecology of the A-share market. By encouraging listed companies to focus on long-term growth and raising the standards of listed companies, the rules aim to to promote rational and value-based financing practices and improve long-term market stability.

Overall, the brand new rules are expected to make a big impression on the Chinese inventory market, setting the stage for an extremely safe and sustainable market environment.

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