SHANGHAI: The China Securities Regulatory Commission has required the Shanghai Stock Exchange (SSE) and China Securities Depository and Clearing Co Ltd (CSDC) to take action to protect the interests of shareholders of Ya Xing in the company's 30 million free scrip issue originally scheduled for July 5.

The issue was delayed by one day because of technical problems, the SSE and CSDC explained in a joint statement earlier this week, due to complexity in Ya Xing's re-listing and stock reforms.

The statement also noted that greater efforts will be made by the SSE and CSDC to better serve investors and improve the ability to manage risks.

As part of the stock reform, Yangzhou-based Ya Xing, a motor coach manufacturer, proposed to issue free scrip shares, made by the company without charge to existing shareholders. As approved by Shanghai Stock Exchange, Ya Xing's shares resumed trading on July 5. Qualified shareholders did not receive the free scrip shares until the day after.

The company's shareholders complained that because of the delay, they were denied the opportunity to make a profit on the rise in the prices of the company's shares on both July 5 and 6. Shareholders are demanding compensation for the unrealized gains, estimated to be about 51 million yuan.

Ya Xing was unavailable for comment on Friday.

The CSRC urged the SSE and CSDC to improve communication with investors to listen to their suggestions and complaints, according to the official China Securities Journal.

The CSRC further said that the SSE and CSDC should take action to protect the legal interests of investors.

Ya Xing was first listed on the Shanghai Stock Exchange in 1999. As a result of the company's loss for three consecutive years from 2003 to 2005, the bourse suspended trading of its shares in May of 2006.

Since then, the company has gone through a process of restructuring.

Song Yixin, secretary-general of the Shanghai Municipal Law Society and partner of Shanghai Wenda Law firm, said the bourse should activate a fund to compensate shareholders.

"This is the only logical step for the exchange to take," said Song.

(China Daily 07/14/2007 page10)

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