Companies listed on the Shenzhen Stock Exchange will be classified into four categories ranging from high-risk to normal in a bid to improve supervision and risk control, the Chinese bourse said on Sunday.
The classification will be based on five criteria – risks involving accounting fraud, business operation, corporate governance, market operation and delisting risk – according to exchange rules published on its website.
Regulators will strengthen scrutiny over higher-risk companies, but the classification does not represent the exchange’s views on share prices or investment recommendations, it said.
The rules, which take effect immediately, come after the Shenzhen exchange’s start-up board ChiNext last week kicked off a historic reform that streamlined the listing process and loosened trading rules.
There are currently 2,280 companies listed on the Shenzhen Stock Exchange, with combined market capitalisation of 32.75 trillion yuan ($4.77 trillion).