China's securities watchdog yesterday published a new regulation
which bans listed companies using funds emerging from the sales of
stocks and bonds in securities transactions for investment
purposes.
This regulation is in reaction to some listed companies choosing
to invest raised capital in risky ventures rather than core
business, a move which could easily backfire, said an official with
the China Securities Regulatory Commission.
The regulation restates that the primary duty of the securities
market is financing, adding that all fund raising from the
securities market should offer more capital to performing listed
companies while reaping more returns for investors.
The new ruling will also see listed companies be asked to renew
and improve methods of storing and using the raised funds while
imposing a timeframe for all release of information thereon.
Directors, supervisors and senior managerial staff of listed
companies are also directly called upon to better safeguard their
company's assets.
The official pointed out that companies and related staff would
be held personally responsible for any serious violation of the new
ruling and face punitive measures.
(Xinhua News Agency March 20, 2007)