``The Zhengbaiwen case that was recently disclosed, and other cases involving improper information disclosure, rang a warning bell for securities regulators,'' Zhou Qinye, director of the listing department of SSE, said over the weekend in a conference about listed companies organized by Price Water House Coopers Shanghai.

Zhengbaiwen refers to the Zhengzhou Baiwen Department Store in Zhengzhou, Henan Province, which enjoyed model status among listed enterprises in the commercial sector but which in fact had suffered significant operational losses in 1998-99 period.

Zhou called for proper information disclosure on the side of listed companies in order to protect investors' interests.

He said the China Securities Regulatory Committee (CSRC) would require all Special Treated (ST) and Particular Transfer (PT) companies listed in China to disclose their financial status every quarter.

ST companies are companies which have recorded losses for two consecutive years and PT companies are those which have lost money for three consecutive years.

There are currently 23 ST companies and six PT companies listed on the Shenzhen and Shanghai stock markets.

CSRC now only requires listed companies to disclose their financial situation every half a year.

Zhou said the quarterly disclosure will likely help reduce risks faced by China's investors.

"In the first quarter of next year, all listed companies, including companies with good performances, will be required to do the quarterly financial report,'' he said.

All the information disclosed, including listed companies' financial reports and big events concerning important financial changes, will be published on the Internet, according to Zhou.

At the moment, the information can only be found in some newspapers designated by CSRC, such as China Securities.

Several authoritative securities newspapers recently published CSRC's notice to publicly criticize listed companies which had been providing misleading information in their financial reports.

Zhou said this move marks a big step forward in the attempt to force orderly and regulated information disclosure.

"CSRC will soon release supporting rules designed to punish those criticized companies,'' Zhou said.

Companies criticized publicly, whether through newspapers or other mass media, will not be able to apply for increased shares until 18 months after the criticism is published.

For companies criticized within the field, this penalty period will last one year.

The Price Water House Coopers Shanghai has invited its partners, and scholars from SSE and Oxford University to talk about the relationship between listed companies and the government, how to implement stock options in China, e-commerce for listed companies and other topics.

(China Daily 11/14/2000)