China likely to delist more problematic companies in 2016

China may force out more problematic listed companies in 2016 as Beijing strengthens the crackdown on market irregularities, and the Shanghai Stock Exchange on Monday for the first time delisted a company for breaching disclosure rules.

A regulatory source told the South China Morning Postthat China’s top securities watchdog, the China Securities Regulatory Commission (CSRC) has compiled a blacklist of 30 to 40 troublesome companies, and has been probing these companies, talking to local government officials, to push forward delisting of unqualified firms.

The CSRC issued stricter rules over delisting arrangements at the end of 2014, and clarified that companies with major law-breaking activities, or that failed to meet financial and trading standards would face mandatary delisting.

However, only two companies have been forcibly delisted since then, while seven companies applied for voluntary delisting.

On Monday night, the Shanghai exchange announced the compulsory delisting of Zhuhai Boyuan Investment. It was the first company to be delisted for breaching information disclosure rules.

Specifically, Zhuhai Boyuan was accused of forging commercial bills, fraudulent accounting, and inflating deposits and shareholders’ equity between 2010 to 2014, the exchange said in a statement.