In recent weeks, the topic of delisting in the stock market has garnered significant attention, leading to a palpable sense of unease among investors and market participantsA notable trend observed has been a continuous decline in the share prices of smaller companies, underperforming stocks, and those quoted at lower price pointsIn light of these circumstances, a spokesperson from the China Securities Regulatory Commission (CSRC) addressed media inquiries, reaffirming that the newly implemented delisting regulations come with a transitional period, suggesting that the number of companies facing delisting is not expected to increase markedly in the short term.

Additionally, the CSRC has expressed its commitment to investor protection concerning delistingThe China Securities Investor Services Center is geared toward guiding investors in asserting their rightsRecently, this center has initiated legal actions against various companies that have engaged in illegal conduct and are now facing delisting or are under risk warning, utilizing tactics like litigation support and derivative litigation.

Delisting is undoubtedly a topic of paramount interest in the stock market, not least because it directly impacts the financial wellbeing of vast numbers of investors

Although the act of delisting may superficially appear as a punitive measure directed at the offending companies, it is, in fact, the investors who bear the brunt of these repercussionsCompanies have already capitalized on the funds raised through their IPOs before being delistedMajor shareholders often secure their profits through share sales long before the delisting occurs, leaving everyday investors vulnerable to significant losses in the marketplace when their shares become worthless following a delistingGiven this context, it is unsurprising that investors are deeply concerned with the measures in place to protect their interests during delisting proceedings.

A pressing question arises: how can the rights and interests of investors be effectively safeguarded during the delisting process? This is a reality that the delisting system must confront directlyThe CSRC urges investors to be proactive in exercising their rights, a fundamental legal entitlement that every investor should exercise

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This measure is foundational in efforts to protect investor interests during delisting.

Nonetheless, relying solely on individual actions taken by investors to protect their rights yields limited resultsA more effective approach would involve the active participation of investor protection agencies, facilitating collective legal actions—often termed representative litigation—to maximize the protection of the interests of the broader investor communityIt is crucial that in the face of any company exhibiting illegal behavior leading to delisting, representatives take it upon themselves to champion the cause of investor rights through this legal avenue.

Furthermore, it would be ideal for publicly listed companies or key stakeholders, such as controlling shareholders and underwriting institutions, to proactively offer compensation for investor lossesImplementing a system akin to "advance compensation" would greatly enhance this process

However, this necessitates prompt involvement and coordination from regulatory bodiesUtilizing “advance compensation” could effectively resolve investor compensation issues quickly and efficiently, preventing protracted legal disputes.

The framework of delisting and investor protection would also benefit from the establishment of an investor compensation fundThis fund serves as a necessary measure, especially considering that when investors contest their rights through litigation, they often face the daunting risk of winning a lawsuit yet being unable to recuperate their financial lossesThe financial condition of some delisted companies can be dire, and controlling shareholders may maneuver to shield their assets from claimsIn such scenarios, it becomes exceedingly challenging for investors to secure owed compensationAn investor compensation fund is essential to shoulder the responsibility of compensating investors and ensuring that their legal endeavors have tangible significance

Without such a fund, an investor may attain a favorable ruling but fail to receive any financial restitution, thus diminishing their motivation to pursue claims in the future—compromising the very essence of investor protection.

Additionally, the delisting process could benefit from the introduction of third-party compensation mechanismsFor instance, local governments could take the initiative to resolve compensation issues faced by investors in their jurisdiction related to delisted firmsThis could involve cash settlements or compensation derived from shares of either currently listed or aspiring public companiesThose local governments that effectively manage these compensation processes could be rewarded by prioritizing their local enterprises when it comes to issuing public equitySimilarly, third-party compensation can also be structured through merger and acquisition schemes

A company that meets the criteria for listing could agree to issue shares directly to investors of a delisted firm in exchange for their old shares, subsequently ensuring that this newly-listed entity gets a head start on the public market.

This approach, in which new companies can succeed in the marketplace while simultaneously providing overdue compensation for delisted companies' investors, is an innovative solution worth consideringIn this manner, the interests of former investors in a decommissioned firm could be channeled into a new investment opportunity, fostering an environment that creates pathways for recovery and engagement in the public market.

In conclusion, the recent discussions around delisting reflect the delicate balance between corporate governance and investor rights in a rapidly evolving financial landscapeAs stakeholders grapple with the implications of these regulations, a collective effort involving regulatory oversight, legal frameworks for group actions, proactive compensation strategies, and innovative funding mechanisms could pave the way for a more resilient and investor-friendly market structure