Capital market regulatory environment in China continues to tighten, with substantial enhancement in regulatory measures against shareholders' reduction of holdings. The Securities and Exchange Commission (SEC) rigorously combats illegal reduction of holdings to safeguard market order and investors' rights. This trend is fully demonstrated in the recent two cases of filing for investigation.
It is reported that Xin Yisheng and Tian Shun Stock, two listed companies, have recently issued announcements, disclosing that their actual controllers are under investigation by the SEC for violating restrictive rules on transferring stocks. Specifically, Gao Guangrong, the controlling shareholder, actual controller, and chairman of Xin Yisheng, as well as Wang Puwu, the actual controller of Tian Shun Stock, received notification or notice from the SEC on December 20, 2024.
Both companies emphasized in their announcements that the filing for investigation is targeted at the personal stock transfer behavior of the actual controllers and is irrelevant to the company's daily operations, which will not affect the company's operation. The market keeps a high level of attention on such illegal reduction of holdings, and the filing for investigation by the SEC highlights its zero-tolerance attitude towards illegal activities in the capital market.
In recent years, with the rapid development of the capital market, some illegal and illegal activities occur frequently, seriously disturb the market order, and harm the legitimate rights and interests of investors. Therefore, the SEC continuously strengthens the construction of laws and regulations, increases law enforcement efforts, and severely打击 illegal reduction of holdings and other illegal activities. In 2024, the SEC issued "Interim Measures for the Management of Shareholders' Reduction of Holdings in Listed Companies" and other regulations, further clarifying the reduction system and enhancing the legal status, making the rule system clearer and clearer.
These new regulations not only regulate the reduction of holdings of major shareholders, especially controlling shareholders, actual controllers, directors, supervisors, and other key minorities, but also comprehensively plug potential loopholes in rules and strictly prevent various "circumvention reduction" behaviors. Through strengthening the constraints on shareholders' reduction of holdings and clarifying investor expectations, the new regulations help guide investors to form a rational investment and value investment concept, laying a foundation for the long-term stability of the market.
The SEC insists on strictly打击 illegal reduction of holdings in accordance with the law, increasing punishment力度 for various illegal reduction of holdings, and raising the cost of violation. Since 2024, there have been many cases of punishment for illegal reduction of holdings. For example, Wang Zelong, the actual controller of Zhongke Titanium White, was fined and没收违法所得 for violating restrictive rules on transferring stocks and illegal information disclosure; Chen Zhenhua, the then director of Weidi Stock, was warned and fined for reducing stocks within ten days before the disclosure of earnings forecast; Luoxin Holdings and Jijing Hong Kong were also punished for restricted period transfer of stocks.
The regulatory authorities emphasize that legal and compliant reduction of holdings is allowed, but illegal and circumvention reduction behaviors are strictly打击. For discovered illegal behaviors, they have required repurchase, price difference surrender, and pursued relevant responsibilities. At the same time, investors should also be vigilant, pay attention to the compliance of the company, invest rationally, and jointly maintain the stability and healthy development of the capital market.
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