To do a better job for disclosing listed companies' annual reports of 2007 and in accordance with regulations in the "Rule No.2 on Content and Format of Information Disclosure of Companies with Securities Issued Publicly – 'Content and Format of Annual Reports'" (Amendment in 2007, hereinafter referred to as the "Rule on 2007 Annual Reports") and the "SSE Stock Listing Rules" (hereinafter referred to as the "Listing Rules"), the Shanghai Stock Exchange (SSE) hereby notifies as follows:
1. The directorates of listed companies should organize relevant personnel to carefully study the "Rule on 2007 Annual Reports", carry out requirements by such notices as the "Notice of Doing a Better Job for Disclosing Listed Companies' 2007 Annual Reports and also Relevant Work" (Zheng Jian Gong Si Zi [2007] No.235) and the "Notice of Doing a Better Job for Information Disclosure of Financial Accounting According to New Accounting Standards" (Zheng Jian Fa [2006] No.136), implement relevant documents newly issued by the China Securities Regulatory Commission (CSRC) and the SSE, and promptly compile, submit and disclose annual reports of 2007;
2. All companies listed on the SSE before December 31, 2007 should compile, submit and disclose annual reports of 2007 before April 30, 2008. Companies newly listed between January 1 and April 30, 2008 should also disclose their annual reports of 2007 before April 30, 2008 if they don't disclose audited annual performance of 2007 in their listing announcements.
Listed companies, if predicting they are unable to do so, should submit written reports to the SSE before April 15, 2008 and announce the reason, solutions and deadline of the postponed disclosure. The SSE will suspend trading of their stocks and derivatives from May 1, 2008, and at the same time publicly criticize the companies and the personnel concerned;
3. According to the principle of balanced disclosure, the SSE, in order to avoid too concentrated disclosure of annual reports of listed companies, will allow a daily maximum of 45 listed companies to disclose their annual reports. Listed companies should, in line with the schedules stipulated with the SSE, arrange their compilation work and timely disclose their annual reports.
Schedules for listed companies to disclose their annual reports and any changes will be announced on the SSE's website;
4. The directors, supervisors, senior management and other secrecy-bound personnel should hold secret-keeping obligations during the compilation of annual reports, and they should by no means divulge the contents in any ways before the disclosure.
Before annual reports are officially disclosed and if performance is divulged in advance, or abnormal fluctuation happens to trading of stocks or their derivatives because of performance rumors, listed companies should immediately announce unaudited financial data of 2007, including business income, business profit, total profit, net profit, total assets, net assets, earning per share, earning per share excluding extraordinary profit and loss and net assets per share.
After disclosing the performance express, if there is significant discrepancy as mentioned in the Chapter XI of the "Listing Rules" between actual performance and performance express, listed companies should promptly announce another performance express to modify the announcements and explain the discrepancy and reason;
5. If listed companies predict negative net profits in 2007 and have not predicted their whole-year performance in the 3rd quarter report of 2007, or a great discrepancy between the predicted whole-year performance and the disclosed performance prediction, they should promptly disclose their announcement on performance prediction or announcement on modification to performance prediction on January 31, 2008 at the latest.
Besides, according to the "Listing Rules", listed companies, in light of the above requirement, should also promptly disclose their performance prediction if they predict positive net profits in 2007 with a dramatic year-on-year performance change in net profit. Listed companies, whose comparable base in the same period of last year is low (with the absolute value of earning per share below or equal to RMB0.05 in 2006), can be exempted from this disclosure upon approval by the SSE; and if they disclose their performance prediction, the comparable data of 2006 should also be disclosed at the same time;
6. Listed companies should apply to the SSE for exemption if they are unable to disclose information according to the "Rule on 2007 Annual Reports" due to such special reasons as commercial secrets. Moreover, they should detail the reasons for not performing relevant requirements. Upon approval by the SSE, companies can be exempted from information disclosure, but they should give the reasons in relevant chapters of annual reports;
7. Listed companies should formulate and disclose their adjusted income statements in the same period of last year and the balance sheets at the beginning of 2007 in accordance with relevant regulations in the "Q&A No.7 on Information Disclosure Regulations for Companies Offering their Securities to the Public - Comparing Information Compilation and Disclosure of Financial Accounting during Transition Period of Old and New Accounting Standards" (Q&A No.7). Besides, they should also disclose the reconciliation statements of profit discrepancy in the same period of last year in the annotations of financial statements according to the Q&A No.7, and list the retroactive adjustments to the income statements in the same period of last year;
Meanwhile, listed companies, in accordance with the "Interpretation No.1 to Accounting Standards for Enterprises" (Cai Kuai [2007] No.14), should disclose in lists the adjustments to owners' equity at the beginning of the year, the modified items, the affected amount and the reasons in the annotations of financial statements;
8. In the process of listing the major accounting data and financial indicators in the full texts of annual reports and their abstracts, data in the comparable base period for calculation of increase or decrease of major accounting data and financial indicators should be pursuant to relevant data in the adjusted financial statements compiled according to the Q&A No.7.
Data at the end of 2005 and 2006 in the balance sheets of texts 3.1 and 3.2 in the full texts of annual reports and their abstracts should be pursuant to relevant data in the adjusted balance sheets at the beginning of 2006 and 2007 compiled according to the Q&A No.7; data of 2006 in the income statements and cash flow statements should be pursuant to relevant data in the adjusted income statements and cash flow statements of 2006 compiled according to the Q&A No.7. Besides, relevant data and financial indicators of 2005 should be adjusted and disclosed according to the compilation caliber of comparable financial data of the Q&A No.7;
9. Listed companies, making profits in 2007 but having no scheme of cash profit distribution, should present reasons in the announcements on directorate resolutions that discuss and approve the annual reports, and make clear the usage and usage plan for the undistributed profits;
10. When auditing listed companies' annual financial reports, certified public accountants should issue special remarks on listed companies' existing capital occupation by controlling shareholders and other affiliated parties in line with the regulations of the "Notice of Some Issues on Regulating Fund Transfer Between Listed Companies and Related Parties and Outward Guarantee Provided by Listed Companies" (Zheng Jian Fa [2003] No.56). Listed companies are also required to disclose special remarks on the SSE's website when releasing the annual reports.
Listed companies with capital occupation by major shareholders and their affiliated enterprises for non-operational purpose should make additional disclosure of the occupation date, amount, causes, persons in charge and their directorates' solutions in the "Creditor's Rights and Liabilities between Related Parties" in the "Significant Events" in the full texts of their annual reports and the 7.4.3 "listed Companies' Capital Occupation and Clearing Progress in 2007" in the annual report abstracts;
11. According to requirements of the CSRC and the SSE, listed companies should, combining their internal control mechanism construction, explain their internal control mechanism and its establishment and improvement in the "Significant Events" in the full texts of their annual reports of 2007.
Listed companies are encouraged to disclose the directorates' self-evaluation reports of the internal control and the opinions of auditing institutions;
12. If directors, supervisors, senior management and shareholders with more than 5% shares in the company are suspected of irregular purchase and sale of shares during the reporting period, or such suspected irregularities happen and the profits from them are disclosed to be withdrawn by the companies, listed companies should disclose the time and amount of the profits withdrawn by the directorates in the "Significant Events" in the full texts of their annual reports;
13. After certified public accountants issue auditing report, listed companies should complete compilation of the annual reports within two working days and submit the following documents to the SSE within two working days after the directorates approve the annual reports:
1) The full text of the annual report of 2007 (including the audited annual financial report) and its abstract (one copy for each) signed by the current legal person representative and sealed by the company;
2) The resolutions of the directorate, the written confirmation of the annual report of 2007 signed by directors and the senior management, and special remarks and independent opinions on the outward guarantee signed by independent directors;
3) The resolutions of the board of supervisors and a written verification of the annual report of 2007 put forward by the board of supervisors in the form of its resolutions;
4) An auditing report (original document) and the special remarks (original document) on the capital occupation by the controlling shareholders and other related parties of the companies issued by the certified public accountants;
5) The e-document for disclosure of the annual report of 2007 (for compilation and submission requirements of e-document, please refer to the business memo of the "Disclosure of Annual Report of 2007" in the Section of Listed Companies on the SSE website);
6) The application form for disclosure of the annual report of 2007 (downloadable from the SSE's website), ready-to-disclose announcements and the application form for disclosure of announcements (one copy for each);
7) Other documents required by the SSE.
Listed companies should prepare for enough texts and disks of annual reports and abstracts for typesetting and proofreading by their designated newspapers.
Listed companies should submit the above documents before 15:30 on the trading day prior to the disclosure, and can't contact designated newspapers for publishing the annual reports and abstracts until the SSE completed relevant registration procedures;
14. In the process of implementing the new accounting standards, if relevant projects and their amounts of the previously disclosed balance sheets at the beginning of 2007 have been changed or adjusted according to the regulations newly published by the Ministry of Finance and the CSRC, listed companies should submit them as single proposals together with the annual reports to the directorates for discussion, and make remarks on the changed or adjusted projects and their amounts in the announcements on directorate resolutions.
If listed companies have made the change of accounting policies and accounting estimations or the adjustments to significant accounting errors but not for implementing the new accounting standards, they should make remarks in their annual reports according to the requirements of the "Rule on 2007 Annual Reports". In addition, when submitting the annual reports, they also should submit to the SSE the written opinions of the directorate, the board of supervisors and independent directors as well as relevant remarks by accounting firms concerning the above change and modification. The remarks should include the reasons for the above change and modification, the detailed accounting treatment, the affected amount on previous years' financial conditions and operational results concerning retroactive adjustments, and whether necessary communication has been conducted with former accounting firms concerning the change of accounting firms.
If listed companies have made the retroactive adjustments to the financial data in the previous years in the annual reports for modifying significant accounting errors, they should, according to relevant regulations of the CSRC, disclose the modification to significant accounting errors in the form of temporary announcements before or on the disclosure date of the annual reports;
15. If accounting firms issue non-standard audit reports (audit reports with stressed issues and unqualified opinions as well as audit reports with non-unqualified opinions) to listed companies' financial accounting reports of 2007, listed companies should submit relevant documents to the SSE according to the regulations of Chapter VI of the "Listing Rules".
If accounting firms issue the audit reports with disclaimer of opinion or adverse opinion to companies' financial reports of 2007, listed companies should disclose risk alerts every half-month from the disclosure day of the annual reports of 2007 to the settlement day of the involved issues or the disclosure day of the semi-annual reports of 2008. The risk alerts should contain the companies' latest operation performance and the progress of the involved issues;
16. Listed companies, if having issued convertible bonds, should disclose additional contents in the annual reports according to the requirements of Chapter VI of the "Listing Rules".
Commercial banks, insurance companies, securities companies and companies engaged in real estate development should execute the special information disclosure regulations formulated by the CSRC on special industry or business;
17. Listed companies should require certified public accountants to verify the trueness, accuracy and completeness of the companies' extraordinary profit and loss of 2007 and include related contents of extraordinary profit and loss in the accounting statements' annotations appended in the audit reports in accordance with regulations in the "Q&A No.1 on Information Disclosure Regulations for Companies Offering their Securities to the Public - Extraordinary Profit and Loss" (Amendment in 2007);
18. Listed companies are encouraged to publish their annual reports on their own websites, yet the time can not be earlier than the disclosure time on the SSE's website;
19. Listed companies who have issued domestically listed shares to foreign investors should also publish contents of their annual reports overseas at the same time, and timely submit the published foreign newspapers to the SSE for record;
20. The SSE will implement after-action check toward the annual reports of the listed companies. After receiving the examination opinions of the SSE, the companies are supposed to provide written explanations and descriptions on the issues involved. Besides, they should also publish relevant supplementary and modification announcements in the designated newspapers and websites, and disclose the modified full texts of the annual reports on the SSE's website.
Shanghai Stock Exchange
January 2, 2008
Source:Shanghai Securities News
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