ChiNext to Allow Delisting of Firms

ChiNext, China's Nasdaq-style board in Shenzhen, will allow delisting of companies from May 1, the China Securities Regulatory Commission said on Friday.

The Shenzhen Stock Exchange also said in a statement that companies on the ChiNext will be delisted if they receive three criticisms from the exchange in the recent three years, or if their share prices fall below their par value for 20 consecutive trading days, or if net assets become negative in the past two years after balance sheet adjustments due to false auditing.

The exchange said companies will be suspended from trading on ChiNext if they report negative net assets in the latest fiscal year. It also said it will tighten listing rules and backdoor listing will not be tolerated.

The action is a clear sign that the authorities intend to regulate the poorly-performing board more strictly for better management and control.

The ChiNext-listed firms saw their combined annual profit growth halve from that in 2010 to 17 percent last year. So far this year, ChiNext's performance has been worse than that of the main boards on the Chinese mainland.

ChiNext was launched in October 2009 to help innovative companies get access to funds but investors have been disappointed as their growth outlook was not as high as they had hoped.