Currently, with the continuous improvement in the construction of a multi-tiered capital market system, the inclusiveness and openness of China's capital market have been significantly enhanced. Nevertheless, some listed companies with long-term losses or even questionable operational sustainability are still given irrational premiums merely for their listing status, giving rise to rampant “shell speculation”.

At this year’s Two Sessions, Jiao Qisen, an NPC Deputy and Chairman of China Jing An, focused on this persistent issue. He suggested that effort should be made from multiple dimensions including institutional planning, enforcing supervision, and guiding market to systemically standardize the operation of shell resources transaction in order to effectively maintain market fairness, transparency, and stability as well as promoting the capital market to better serve the real economy.

In his research, Jiao Qisen has observed that in recent years, the frequency of controlling rights transfers among A-share listed companies has increased significantly. Although the regulatory authorities have paid high attention to the issue of “shell speculation” and implemented a series of policy that demonstrates a firm resolve to curb such practices, phenomena such as highly leveraged arbitrage, false commitments, and instability in control rights continue to occur in practice.

To further regulate “shell resource” transactions and to prevent market speculative risks, Jiao Qisen put forward the following suggestions:

First of all, the further refinement of regulatory measures is essential to enhance the precision of enforcement. He proposed that the lock-up period for new actual controllers of listed companies should be extended to seven years, alongside a commitment to refrain from pledging acquired shares as collateral for financing within 36 months. This aims to guide patient capital and capital with long-term industrial strategic plans to acquire listed companies. Concurrently, it is advisable for relevant authorities to establish a "Key Monitoring List for Shell Companies," thereby increasing the frequency and deepening the scope of information disclosures.

Secondly, it is necessary to encourage listed companies to focus their core business operations on the development of new quality productive forces. For new actual controllers, it is important to support them in enhancing their control through private placements while obtaining control of listed companies. 

The final step is to strengthen risk disclosure and to guide value investment. For listed companies included the “Key Monitoring List”, the trading system must issue comprehensive risk warnings, and transactions can only proceed after the investor confirms that they are aware of the relevant risks.. Meanwhile, in order to improve investors’ rational decision-making ability, various measures, such as media outreach and investor training, should be actively adopted to popularize the concept of value investment, reveal the risks of “shell speculation” .