In order to further regulate listed companies’ information disclosure behaviors and strengthen capital markets’ support for Internet companies, Shenzhen Stock Exchange (“SZSE”) recently promulgated information disclosure guidelines for ChiNext-listed companies in three industries, i.e. Internet gaming, video and electronic commerce.
Currently, there are 16 companies engaged in online gaming, 3 companies engaged in Internet video and 3 companies engaged in e-commerce on the ChiNext board. Along with the deepening of Internet reform, more and more traditional industries have set foot in online business. Internet companies have distinct industrial features in aspects of business and profit models, which are difficult to be reflected under the existing information disclosure rules, thus failing to fulfill investors’ information demands. In a bid to propel Internet-related companies to better perform their information disclosure obligations, SZSE formulated the aforesaid guidelines on the basis of the commonness of Internet-related companies and the practical experiences on information disclosure.
The guidelines for the online gaming industry are featured with the following disclosure requirements: first, operational results of main games are required to disclose in the annual and semi-annual reports, including the number of users, active users and paying users, ARPU value, current accounts of top-up, etc.; second, marketing costs, inventory and intangible assets are required to disclose in the annual and semi-annual reports; and third, the disclosure requirements on the operation data when a new game goes online or substantial change occurs to main games are explicated.
The guidelines for the Internet video industry are featured with the following disclosure requirements: first, the general indicators applicable to the video industry are made clear, such as the average daily page views, number of daily unique visitors, average daily video views, average stay length of users, etc.; second, the general indicators are required to disclose respectively according to different types of terminals (e.g. PC client, web, mobile and other terminals); and third, the accounting treatment methods and amount changes for copyright and self-produced contents are required to disclose in the annual and semi-annual reports.
The guidelines for the e-commerce industry are featured with the following disclosure requirements: first, the general indicators reflecting the e-commerce industry are made clear, such as the SKU on the e-commerce platform (proprietary products and third-party sellers products), total orders, total transaction amount, average order amount, etc.; second, customers’ payment methods (e.g. pre-paid, post-paid, etc.) are required to disclose, and ways of revenue recognition should be explained; and third, the conditions of logistics business are required to disclose, including logistics business models (self-built or outsourcing), investment amount, operation efficiency (such as inventory turnover), etc..
In the process of drafting the information disclosure guidelines, SZSE has been sticking to the market-oriented principle. Upon the completion of the first draft, SZSE invited industrial analysts from fund companies and securities companies to participate in the formulation process, and at the same time solicited comments from relevant listed companies. The feedbacks were discussed, revised and replied one by one. In addition, questionnaires were also sent to some investors, making the guidelines more close to the actual situations of listed companies so as to meet the needs of investors.
The ChiNext board is featured with emerging industries. SZSE will continue to take the board as a breakthrough point, study the industrial characteristics and sum up the experiences of supervision. SZSE will continue to steadily push forward industrial regulations, constantly improve the pertinence and effectiveness of information disclosure, and provide better services to investors.