China’s stocks regulator sets legal framework to expel firms that pollute, or make fake vaccines
Companies involved in fraud, disclosure violations or whose actions harm public health, national or ecological security, will be expelled from the stock market
China’s securities regulator, responding to public uproar over a vaccines scandal, has strengthened the expulsion rules on the country’s equity exchanges, laying the groundwork for kicking out culpable producers from the capital market.
Stock exchanges should take the lead to delist, or suspend any listed company that’s involved in fraud, any violations of disclosure rules, or whose action “threatened public health, national or ecological security,” the China Securities Regulatory Commission said, citing revised listing regulations released on late Friday night.
The revised rules give teeth to a regulatory framework that has otherwise stood powerlessly by while dozens of companies continued to raise funds through Asia’s biggest capital market, even after they’ve been held responsible for pollution, corporate malfeasance or producing substandard foodstuff and medicine.
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“This is significant change,” said Xu Feng, a senior partner at Shanghai Trend Law Firm, according to the China Economics Weekly. “There will be additional delistings because of the added criteria.”
China has been roiled in recent weeks by revelations that several vaccine producers had falsified their inspection and manufacturing records, releasing hundreds of thousands of doses of ineffective or substandard medicine into the market. President Xi Jinping ordered a thorough investigation, and Premier Li Keqiang dispatched a task force to crack down on substandard producers nationwide.
Shenwan Hongyuan Medical and Biotech Index, which tracks the performance of 283 companies in the health care and pharmaceuticals sector, lost 2.9 per cent this week, the worst performing sector on the stock market.