China’s Securities Regulator Mandates Inclusion of Debt Financing and Carbon Mitigation Measures in Financial Reports


China’s securities regulator has made a range of changes to the formatting of financial reports submitted by companies listed on domestic bourses.

On 28 June the China Securities Regulatory Commission (CSRC) issued the amended versions of two key documents for the formatting of reports submitted by listed Chinese companies.

These included:

  1. The “No. 2 Annual Report Contents and Formats for the Information Disclosure Contents and Formatting Standards of Companies that Publicly Issue Securities” (公开发行证券的公司信息披露内容与格式准则第2号—年度报告的内容与格式), and
  2. The “No. 3 Semi-annual Report Contents and Formats for the Information Disclosure Contents and Formatting Standards of Companies that Publicly Issue Securities” (公开发行证券的公司信息披露内容与格式准则第3号—半年度报告的内容与格式).

CSRC said that the amendments were made based on opinions solicited from the public during the period from 7 May to 7 June, as well as recent changes to the “Securities Law” (证券法) and the “Listed Company Information Disclosure Administrative Measures” (上市公司信息披露管理办法).

Key changes to the document formatting requirements include:

  1. Adding standard requirements for the regular reporting approval procedures and objection statements of company directors and supervisors.
  2. Requiring that STAR Market and GEM companies include targeted disclosures reflecting their industry competitiveness in annual reports. If STAR Market and GEM companies are not profitable at the time of listing, prior to earning profits they are required to disclose in their annual reports the reasons for lack of profitability, as well as impacts and risk.
  3. Requiring that companies that publicly issue enterprise bonds, corporate bonds or non-financial enterprise debt financing instruments on the interbank bond market disclose their bond information in special chapters in their regular reports, as well as adjust disclosure contents of bond-related information.
  4. Where net profits excluding extraordinary profit and loss in annual reports are negative, companies are required to include information on operating revenue deductions in annual reports.
  5. Requiring the inclusion of special disclosures in regular reports concerning guarantees, management and control of subsidiaries, entrustment of voting rights, and financial company affiliate transactions.
  6. Requiring that companies make disclosures in their regular reports of measures adopted to reduce carbon emissions as well as their results, and information on work in relation to poverty alleviation and rural village revival.

CSRC said that the new formats were also simplified, while also removing the “Operating Situation Discussion and Analysis” (经营情况讨论与分析) chapter and replacing it with chapter on the “Analysis of Key Events During the Reporting Period” (对报告期内重要事项进行分析).

According to CSRC the next step will be to “further strengthen the regulation of the regular disclosures of listed companies, and pragmatically uphold the lawful rights and interests of investors.”