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Loopholes remain in delisting system
Last Updated: 2015-04-28 17:39 | Global Times
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Although Zhuhai Boyuan Investment Co has underperformed the ongoing bull market, it has still managed to become famous recently. It was the first company set to get delisted from the Shanghai bourse under the new delisting rules that went into effect in October.

The Shanghai Stock Exchange gave Zhuhai Boyuan a delisting risk warning on March 31 as the company was found to have violated the law.

On each trading day from March 31 to April 9, the company's share price fell by the daily trading limit. On April 10, however, the price rose by the daily trading limit as money flooded into the stock. The stock then climbed to the daily limit for six consecutive days.

Obviously, financial institutions with a large amount of money invested into the stock know the company faces the risk of delisting. Clearly they don't take the risks seriously, which also challenges the current delisting rules.

It also reflects the defects with the current delisting rules. Even if a company has been suspended from the bourses, it still has the opportunity to relist on the market if it stops all illegal activities and replaces personnel who violate the law. But it has to do so before the securities regulators make the final decision to delist the company.

Regulators need to work harder to improve management of the delisting system.

The author is Cao Zhongming, a commentator.

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