Securities Regulatory Coordination in Pre-Reorganization Procedures of Listed Companies

DOI: https://doi.org/10.62517/jel.202614202

Author(s)

Xiyang Li

Affiliation(s)

School of Law, Central University of Finance and Economics, Beijing, China

Abstract

As credit risk exposure accelerates in China’s A-share market, pre-reorganization has emerged as a prominent mechanism for resolving the debt crises of listed companies. Yet pre-reorganization remains outside the statutory framework of the Enterprise Bankruptcy Law, and its foundational logic of confidential negotiation stands in structural tension with the mandatory disclosure regime of the Securities Law. This article examines the securities regulatory coordination challenges arising in listed company pre-reorganization from three dimensions: information disclosure, insider trading regulation, and trading suspension and resumption arrangements. It identifies a triple dilemma: the absence of disclosure rules tailored to each phase of pre-reorganization, the difficulty of identifying and controlling insider information generated during the process, and the lack of unified standards for trading suspension and resumption. Drawing on a comparative analysis of the dual-track constraint model under Chapter 11 of the U.S. Bankruptcy Code and the SEC regulatory framework, as well as the delayed disclosure and principles-based regulatory dialogue mechanisms in the United Kingdom, this article extracts three foundational principles — persistent yet flexible disclosure obligations, continuous application of anti-fraud rules with permissible information sharing under institutional safeguards, and non-suspension as the default — and translates them into context-specific institutional proposals for China. Specifically, it advocates a three-tier disclosure framework comprising trigger-based, deferred, and supplementary disclosure; a strengthened insider trading regime with defined formation points, an expanded scope of insiders, and mandatory information barriers; a flexibilized suspension mechanism conditioned on prior disclosure compliance; and a court–securities regulator notification and early-intervention coordination mechanism. These proposals aim to reconcile the confidentiality imperatives of pre-reorganization with the transparency demands of securities regulation through a phased, elastic, and supervisable set of coordinating rules.

Keywords

Pre-Reorganization; Listed Companies; Securities Regulation; Information Disclosure; Insider Trading; Trading Suspension and Resumption; Regulatory Coordination

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