The Shanghai stock exchange is cracking down on shareholders with controlling stakes in companies who pledge a high percentage of their
holdings as collateral for financing, the China Securities Journal said
on Friday, without citing sources.Find the
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The practice has prompted regulatory concern that a sharp fall in share prices could lead to a sudden change in the controlling
shareholders of firms, which could consequently destabilise the market.
The newspaper said the Shanghai Stock Exchange (SSE) has asked controlling shareholders to disclose the share-backed loans they’ve
taken out and to take measures to avoid a credit crisis.
In some cases, they have assisted investors in share disposals in “a safe way”For these companies, the SSE has delivered regulatory work
letters to the relevant controlling shareholder and asked such investors
to set aside funds to mitigate associated risks.
The SSE also looked into whether controlling shareholders had misdirected funds or breached guarantees, and initiated disciplinary
procedures for a group of offenders.
The exchange is also finalising new disclosure requirements on share pledges that will require the publication of associated credit
arrangements, the paper said.
