Listed companies must not speculate with funds raised from capital markets: CSRC

China's securities watchdog has issued a new regulation which prevents listed companies investing funds raised through the sale of stocks and bonds in securities transactions, such as stocks and related derivatives, and tradable bonds.

The regulation has been issued in response to some listed companies investing raised capital in risky ventures rather than core business, which could prove hazardous, said an official with the China Securities Regulatory Commission.

The regulation reiterates that financing is the basic function of the securities market. Fund raising from the securities market is intended to gain more capital for the listed companies to achieve a better performance while at the same time offering more returns to the investors.

The new ruling also requires listed companies to improve its methods of storing and using the raised funds and to disclose information in a timely fashion. It also calls on directors, supervisors and senior managerial staff of listed companies to safeguard their company's assets.

Companies and related staff will be held responsible for serious violation of the new ruling, the official said.

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