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)