On December 5th, the China Securities Regulatory Commission (CSRC) publicly solicited opinions on the "Regulations on the Supervision and Administration of Listed Companies (Draft for Public Solicitation of Comments)" (hereinafter referred to as the "Regulations"), clarifying the overall requirements for the supervision of listed companies, improving corporate governance requirements, strengthening information disclosure supervision, regulating mergers and acquisitions, strengthening investor protection, and stipulating supervision and legal responsibilities, covering all aspects of the supervision of listed companies. In the eyes of industry insiders, the "Regulations" are the basic laws and regulations for the administrative supervision of listed companies, playing a bridging role, connecting the "Securities Law of the People's Republic of China" and the "Company Law of the People's Republic of China", and providing a more direct authorization basis for the rules and regulations of the China Securities Regulatory Commission. It constructs a more rigorous regulatory system with clearer rights and responsibilities, thereby enhancing the standardization, stability, and predictability of capital market supervision, and better promoting the high-quality development of listed companies. The Regulation will have a positive impact on improving the quality of listed companies in three aspects: enhancing corporate governance, optimizing resource allocation, and strengthening market discipline. ”Professor Guo Li from Peking University Law School stated in an interview with Securities Daily that firstly, by systematically regulating corporate governance, the stability and long-term value of the company can be enhanced; Secondly, strengthening institutional support for mergers and acquisitions will promote listed companies to optimize their business structure through resource integration; Thirdly, by increasing the crackdown on illegal activities, consolidating the foundation of market integrity, and promoting the compliant operation of listed companies. One major highlight of the Regulation on the Implementation of Institutional Upgrading for the Governance of Listed Companies is the establishment of a special chapter to focus on regulating the governance of listed companies, clarifying the basic structure of listed company governance, regulating the behavior of directors and senior management, regulating the behavior of controlling shareholders and actual controllers, and ensuring and regulating the exercise of shareholder rights. In the past, although the Securities Law of the People's Republic of China and the Company Law of the People's Republic of China provided fundamental provisions for corporate governance, more operational requirements for the governance of listed companies were scattered in the rules formulated by the China Securities Regulatory Commission and exchanges. The Regulation has changed this situation by serving as an 'intermediate level' norm, comprehensively sorting out and refining the core system of governance for listed companies, and achieving the upgrading of regulatory logic. ”Guo Li stated that the improvement of governance systems for listed companies will significantly enhance their quality, thereby ensuring the stable operation of the capital market. Professor Tang Xin from Tsinghua University Law School stated in an interview with Securities Daily that the Regulation has many highlights. For example, defining the basic responsibilities and directions of independent directors; In accordance with the relevant provisions of the Criminal Law of the People's Republic of China, the act of "breach of trust and damage to the interests of listed companies" is clearly defined as an administrative illegal act and administrative penalties are stipulated; Specifically defining the fiduciary duty of directors and executives of listed companies; On the basis of the principle provisions of Article 138 of the Company Law of the People's Republic of China, the basic responsibilities of the Secretary of the Board of Directors are specifically stipulated; Enriched and improved the provisions of Article 139 and Article 182 of the Company Law of the People's Republic of China regarding related party transactions; Define directors, executives, and other individuals who actually perform their duties in the context of "insider control" as "dual controllers". Guo Li stated that the relevant norms of corporate governance in the Regulations are mainly reflected in four dimensions: firstly, consolidating the organizational foundation. Make detailed provisions on the content covered by the articles of association, resolutions of the shareholders' meeting, and the powers of the audit committee, further improving the governance structure of listed companies. The second is to secure the 'key few'. It is explicitly prohibited for controlling shareholders and actual controllers to illegally occupy funds and manipulate the company, and to confine the power of the "key few" in the cage of the system. The third is to strengthen the obligation of trustworthiness. In terms of directors and senior management, the Regulation has refined the obligations of loyalty and diligence, strengthened the accountability system, and effectively reduced agency costs. The fourth is to improve the guarantee mechanism. The Regulation particularly strengthens the performance guarantee of independent directors and board secretaries, aiming to achieve full compliance of all personnel. Upgrading the "toolbox" for preventing and combating counterfeiting is a basic requirement for listed companies to disclose information truthfully in accordance with the law. On the one hand, the Regulation focuses on the vicious illegal disclosure of financial fraud, and strengthens regulation from different perspectives such as prevention and punishment, cracking down severely; On the other hand, focus on the key issues that arise in practice, such as fair disclosure, cooperative disclosure, exemption disclosure, and changes in the purpose of fundraising disclosure, and propose solutions and strategies. In terms of cracking down on financial fraud, the Regulation further increases the supply of basic systems and improves the mechanism for preventing and combating fraud. Firstly, strengthen the supervision of related party transactions, emphasize the fairness, necessity, and compliance of related party transactions, and prevent financial fraud. Second, strengthen the internal supervision and restriction of the company, require the listed company to establish and improve the internal control system, clarify the composition of the audit committee of the board of directors, as well as the responsibilities of the audit committee for the pre audit and post investigation of the financial report, and stipulate the obligation of the board of directors to actively recover the profits and salaries that are distributed more than they are counterfeited. Thirdly, it is explicitly prohibited for related parties, customers, suppliers, and other third parties to cooperate in fraud, and the legal responsibility for third-party cooperation in fraud should be clarified, with a maximum fine of 10 million yuan, to break down the fraud "ecosystem". In addition, the Regulation also stipulates that for financial fraud, listed companies, related parties, and cooperating parties will be included in the list of serious dishonest entities in accordance with regulations, and will be publicly disclosed to the society through designated websites within a certain period of time. Industry insiders say that this move aims to further strengthen regulatory deterrence, increase the cost of illegal financial fraud, and thereby curb the impulse of relevant entities to engage in fraud. Tang Xin stated that the "Regulations" further enrich and improve the "toolbox" for preventing and combating financial fraud from the basic regulatory level on the basis of existing norms. Guo Li stated that the "Regulations" have strengthened the supply of basic systems and formed a "combination of punches" against financial fraud, which will promote the compliant operation of listed companies and improve the overall market environment. In addition, the Regulation highlights the punishment for fund occupation and illegal guarantees. On the one hand, it is prohibited for controlling shareholders and actual controllers to illegally embezzle funds of listed companies, manipulate listed companies to provide funds or provide illegal guarantees. On the other hand, clarifying the administrative responsibilities for fund occupation and illegal guarantee, filling the legal "gap", the "Regulations" clearly impose fines on illegal behaviors such as occupying guarantees. Comprehensive strengthening of investor protection is stipulated in the special chapter of the Regulations, focusing on key aspects such as market value management, dividends, repurchases, and delisting, to comprehensively enhance investor protection. Regarding market value management and dividend repurchase, the Regulation summarizes effective practices in practice, with the core being to strengthen the awareness of listed companies and relevant parties to actively return to investors, and urge listed companies to internalize the legal enhancement of company investment value into internal systems and positive actions. Guo Li stated that in terms of investor protection, the Regulation mainly regulates from three aspects. Firstly, we will further improve the quality of information disclosure, strictly prohibit the manipulation of the securities market, fabricate and disseminate false or misleading information, and continuously improve the basic conditions for investors to judge the value of listed companies, avoiding the emergence of a "lemon market". Secondly, it is required that listed companies pay attention to the investment value of the company and make institutionalized arrangements for cash dividends and share repurchases, which will increase investors' expectations of long-term returns and promote a shift in investment behavior from short-term trading to long-term allocation. Thirdly, strictly regulate the delisting system, prohibit any unit or individual from interfering with the stock exchange's decision to terminate listing and trading, strengthen the market mechanism of survival of the fittest, reduce the accumulation of resources to low-quality companies, and guide investors to concentrate on companies with stable governance and standardized operations. In addition, industry insiders have stated that the "Regulations" also emphasize the need to increase supervision over illegal evasion of delisting behavior, resolutely prevent delisting companies from evading delisting, and prevent listed companies without rescue value from using restructuring procedures to harm the interests of creditors and investors. Tang Xin stated that the Regulation continues the current legislative policy. On the one hand, it clarifies the requirements for listed companies and related parties to promote the enhancement of investment value, strictly prohibits "pseudo market value management" behaviors such as market manipulation, and further improves the mechanism of cash dividends and share repurchases, emphasizing the priority of cash dividends in dividend distribution selection; On the other hand, companies that voluntarily delist are required to provide cash options or other legal forms of shareholder protection measures for dissenting shareholders, and make overall arrangements for the transfer or transaction of company stocks after the termination of listing and trading. (New Society)