Q&A

Stock exchanges' requirements for interim reports

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-07-29 15:52

Shanghai Stock Exchange and Shenzhen Stock Exchange announced on June 29 that all companies listed before June 30, 2010, should disclose their interim reports before Aug 31.

Companies unable to release the interim reports by the deadline should submit written reports to the exchanges before Aug 15, explaining the reasons and set the date for disclosing their reports.

If a listed company fails to disclose the interim report before Aug 31, its stock and derivatives will be suspended from trading until the report is released and the company will be condemned in public.

Both exchanges released the disclosure schedules on June 30. Guangdong Orient Zirconic Ind Sci & Tech Co released its interim report on July 13, the first among all the companies listed.

Ningbo GQY Video & Telecom Joint-Stock Co released its interim report on July 21, the first company on China's NASDAQ-style board ChiNext.

Changsha Tongcheng Holdings Co and Wuhan Kaidi Electric Power Co were the first on the main board in Shenzhen to release the reports, on July 16.

Lucky Film was the first listed company on the Shanghai Stock Exchange to release the interim report.

According to regulations, the interim reports should include information about the company’s investment in securities, the operation of its unlisted joint stock financial enterprises, the commitments made by the company, its shareholders holding more than 5 percent of the company's shares and the actual controller and their fulfillment.

An unaudited financial report for the first half of 2010 would be acceptable.

A listed company should pre-inform the exchanges about its disclosure date and release the reports according to the schedules. Shanghai Stock Exchange said they would arrange for no more than 50 listed companies to disclose reports per day.

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If a company needs to change the disclosure date, it should submit a written application five days in advance, explaining the reasons and the revised date. The exchange will decide whether to accept the application. In principle, only one change would be acceptable.

Members of the Board, members of the Board of Supervisors, senior executives and other staff involved in the confidential information should not disclose the contents of the report in any form before it is released.

If there is a leak, the company should immediately release the unaudited financial information of the first half of 2010, including the company's revenue, operating profits, total profits, net profits, total assets, net assets, basic earnings per share, basic earnings per share after deducting non-recurring gains and losses, net assets per share and return on equity.

The exchanges also encourage companies to disclose their performance predictions if the company predicts net profits generated in the first half of 2010 to be negative or predicts net profits to increase or decrease sharply from a year ago.

The exchanges also encourage companies to release short statements before the release of the interim reports according to relevant regulations.