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the china securities regulatory commission publicly solicits opinions on the "guidelines for the supervision of listed companies no. 10 - market value management (draft for comments)".

according to the website of the china securities regulatory commission, in order to implement the "several opinions of the state council on strengthening supervision, preventing risks and promoting high-quality development of the capital market" (guo fa [2024] no. 10), further guide listed companies to pay attention to their own investment value and effectively improve investor returns, the china securities regulatory commission has studied and drafted the "guidelines for the supervision of listed companies no. 10-market value management (draft for comments)" (hereinafter referred to as the "guidelines"), and is now soliciting public opinions.

the "guidelines" require listed companies to improve their operating efficiency and profitability based on improving the quality of listed companies, and to use mergers and acquisitions, equity incentives, cash dividends, investor relations management, information disclosure, share repurchases and other methods in accordance with the law and in compliance with actual conditions to promote the improvement of the investment value of listed companies.

the guidelines clarify the responsibilities of relevant parties such as the board of directors, directors and senior management, and controlling shareholders of listed companies, and make specific requirements for major index constituent companies to disclose their market value management systems and for companies with long-term negative net assets to disclose their valuation enhancement plans.

at the same time, the "guidelines" clearly prohibit listed companies from engaging in illegal and irregular activities in the name of market value management.

we welcome valuable comments from all market players. the csrc will further revise and improve the regulations based on the public comments received and then publish and implement them.

article 8 of the guidelines states that major index constituent companies should formulate and disclose the market value management system of listed companies after review by the board of directors, which should at least specify the following items:

(1) the specific department or personnel responsible for market value management;

(2) duties and responsibilities of directors and senior management personnel;

(3) internal assessment and evaluation methods of listed companies;

(iv) specific arrangements for monitoring and early warning mechanisms for indicators such as market capitalization, price-to-earnings ratio, price-to-book ratio, etc. of listed companies and the industry average levels of the above indicators;

(v) the response measures of a listed company when its stock price falls continuously or sharply in the short term.

major index component companies should provide special explanations on the implementation of the market value management system at the annual performance briefing.

the situation of continuous or substantial short-term decline in stock prices refers to: ① the cumulative decline in the closing price of the listed company's stock reaches 20% within 20 consecutive trading days; ② the closing price of the listed company's stock is lower than 50% of the highest closing price of the stock in the most recent year; ③ other circumstances stipulated by the stock exchange.

the original text of the draft for comments is as follows: