The Shanghai Stock Exchange (SSE) has published new guidelines requiring all listed companies to disclose major contracts and Sino-foreign investments, the Shanghai Securities News reported today.
As the newly signed contracts of listed companies usually impact their stock prices and operating results, SSE added a new rule that its members have to report important contracts according to a certain format.
It must contain a summary, including the type, the conditions and procedures of taking effect, and the contract's expiry date, as well as the impact on the firm's current and next fiscal year's performance, in a listed company's provisional report.
The third party or parties involved in the contract also need to be clarified in the report, and the business exchange figures between the listed company and its counterpart during the recent three fiscal years are also required to be disclosed.
Furthermore, regarding the analysis of fulfillment capacity, companies must clarify whether they need to apply for loans from the government or financial institutes, and whether they have enough support in production and technical capacities.
The development of the contract, such as taking and losing effect, occurrence of risks, or termination in advance, should be reported at appropriate time.
Meanwhile, the Shanghai bourse revised its own member report format on investment.
Listed non-financial companies' investment in the securities market contributed between five and six percent of their total investment returns of 30 billion yuan (US$4 billion), based on the analysis on the interim reports of listed companies in SSE.
Additionally, listed companies sometimes hold shares with each other, and increasingly the trend is for listed companies to participate in the financial institutes' equity holdings.
As a result, SSE asks listed companies to disclose accounting figures such as total and net assets, operating revenue and net profits of financial agencies whose shares they intend to purchase, as well as board opinions on their investment targets.