Liu Jipeng: Delisting Must Be Linked to Compensation, Cannot Let Retail Investors "Bear Their Own Losses"

Special Topic: Strengthening the Defense Line for the Rights and Interests of Small and Medium Investors—Sina Finance 3.15 Investor Protection Forum

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On March 13, Sina Finance held the 3.15 Investor Protection Forum, featuring a keynote speech by Liu Jipeng, Professor at the Business School of China University of Political Science and Law and a well-known expert in the capital market.

Liu Jipeng stated that delisting must be linked to compensation; investors should not be left to “eat their own losses.” Regarding the delisting system, Liu Jipeng believes this is one of the most urgent legal issues to resolve. He emphasized that strengthening delisting efforts must be based on establishing a comprehensive compensation system.

“Currently, forced delisting is in place, but cases of compensation are extremely rare,” Liu Jipeng said frankly. The key to compensation lies in targeting the “malefactors”—primarily the major shareholders and actual controllers of listed companies, followed by intermediary agencies (accountants, lawyers, appraisers, etc.) that assist in fraud.

He vividly compared, “If listed companies are not made to pay, it’s like ‘baking a pancake with your finger—you’re eating yourself.’” Major shareholders and key operators must bear unlimited liability.

To this end, he proposed two suggestions:

Establish a dedicated compensation fund: The source of funds should include recoveries from major wrongdoers and fines imposed by regulatory authorities for illegal activities. He called for fines not to be fully remitted to the treasury but to stay in the market—“taken from the stock market, used for investors”—forming a compensation reserve to ensure that retail investors’ losses can be covered when a listed company goes bankrupt or responsible parties are unable to pay.

Mandatory cancellation of repurchased shares: Liu Jipeng approved of the central bank-supported policy on September 24 last year, which encouraged listed companies to buy back shares, considering it a key factor in the market rising from 3,000 to 4,100 points. However, he also emphasized the need to learn from mature markets like the U.S., where repurchased shares must be canceled to truly enhance per-share value, rather than allowing listed companies to “buy low and sell high,” which harms retail investors’ interests.

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Editor: Chang Fuqiang