A legal study of mandatory disclosure requirements of listed companies : the road for China

Abstract

Legal protection of investors, especially minority investors has significant effects on the development of stock markets. The mandatory disclosure regime has been established and developed as a strong tool for investor protection. Needless to say, building a sound disclosure legal regime is also vital for the development of China s stock market. Currently, many unique features of China s stock market are inconsistent with the concept of market economy, which produced a lot of problems in its disclosure regime. Also, the trends of globalization and China s WTO accession bring both opportunities and challenges to the existing regime. An important task of China s regulators is to effectively protect their investors through a sound disclosure legal regime so as to improve transparency, efficiency, integrity and safety of the whole stock market. This thesis identifies key characteristics of China s stock market and its listed companies, as well as examines current legal and practical obstacles facing the establishment of a good disclosure regime in China. It explores the experience of disclosure regulation in some foreign jurisdictions and highlights recent legal changes following China s WTO accession as well. This thesis finds that state domination and government intervention in most Chinese listed companies often play a negative role in listed companies performance. For this reason, there were also a number of problems in corporate disclosure, corporate governance, market professionals, regulation and enforcement. This thesis concludes that in order to protect the investors and enhance disclosure performance of listed companies, China should find solutions for rooted problems and substantially improve its regulatory capacity and efficiency of information disclosure through establishing a set of comprehensive and enforceable rules.