JC Master· Listed Company Securities Compliance Column | Several Types of Violations in Share Repurchases by Listed Companies

 

 

 

The high-quality development of the capital market hinges on the compliance foundation of listed companies. As the registration-based IPO system is fully implemented and regulatory frameworks are iteratively refined, securities compliance has become a central pillar for the stable operation of listed firms. Accurately aligning with regulatory guidance and fortifying compliance safeguards are critical enablers for enterprises to navigate market cycles.

 

To this end, we have established this dedicated column, focusing on the core areas of securities compliance for listed companies: summarizing the key points of new regulatory rules, deconstructing the rationale behind typical enforcement actions, dissecting the essence of court rulings, and thoroughly examining the practical challenges of compliance. Adopting a legal‑professional perspective, we employ clear, pragmatic language and scenario‑based analysis to interpret compliance requirements, map out risk pathways, and provide actionable guidance, helping companies strengthen their internal control systems, mitigate compliance risks, and enhance the effectiveness of their compliance management.

 

When compliance thrives, enterprises thrive; when compliance is stable, development is stable. We hope this column will serve as a trusted professional partner for listed companies—helping them discern regulatory trends, address compliance challenges, mitigate compliance risks, and strengthen the foundations of sustainable growth—so that together we can foster the sound and healthy development of the capital market.

 

 

Share repurchases by listed companies have a significant impact on shareholders’ equity and stock trading. …is an important means of rewarding investors and bolstering market confidence. However, some companies have repeatedly crossed compliance red lines during the implementation of share buyback programs. This article examines the matter in light of the latest regulatory cases. (Select 1–2 typical scenarios for each category to facilitate comparative understanding.) , and outlines several major categories of violations in share repurchases for the reference of listed companies.

I. Share repurchases were not conducted in accordance with the plan.

This is currently the most common type of violation. Once a share repurchase plan is disclosed, it constitutes a commitment to the market; the actual implementation must be consistent with that commitment. Severely inconsistent , which undermines investors’ reasonable expectations and will trigger regulatory accountability.

Case: In July 2024, GHWL disclosed a share‑repurchase plan to buy back company shares worth RMB 200 million to RMB 400 million within 12 months. Following approval by the shareholders’ meeting, the repurchase period was extended to April 2026. By the time the deadline expired, the actual amount repurchased totaled only about RMB 100 million, falling short of the plan’s lower limit. The Sichuan Securities Regulatory Bureau has determined that the company failed to carry out the share repurchase as stipulated in the share repurchase report. , the exchange has imposed corrective measures and recorded them in the company’s integrity file; the Shanghai Stock Exchange has issued a regulatory warning to the company’s then-chairman.

II. Repurchased Shares Not Canceled Within the Specified Timeframe

Pursuant to Article 162 of the Company Law, where a company repurchases its shares in connection with a reduction of its registered capital, it shall, from the date of such acquisition, … Within ten days Cancellation; where shares are acquired for purposes such as an employee stock ownership plan or equity incentive schemes, they have not been… Within three years Transfer Likewise, it shall be deregistered before the expiration of the prescribed period. The company must strictly comply with the statutory time limits; failure to do so and proceeding with deregistration after the deadline constitutes a violation.

Case 1: From April to June 2020, NBYS repurchased shares for equity‑based incentive plans. The repurchased shares reached the three‑year holding period in June 2023; however, the remaining shares were neither utilized nor cancelled. It was not until November 2024 that the company completed the cancellation and disclosed the matter publicly. The Shanghai Stock Exchange stated that the company… Failure to promptly cancel the corresponding shares upon maturity as required. The delisting was delayed by approximately 17 months, which deviated from both investor expectations and market consensus. The Ningbo Securities Regulatory Bureau issued warning letters to the company and its then‑secretary of the board, recording the matter in their integrity files; meanwhile, the Shanghai Stock Exchange imposed regulatory warnings on the company and its then‑secretary of the board.

Case 2: In October 2024, SNGF disclosed a share‑repurchase plan, under which the repurchased shares were to be cancelled to reduce the company’s registered capital. The company issued an announcement confirming the completion of the repurchase in April 2025, but did not disclose the creditors’ notice until September 2025—significantly later. As the company repurchased shares to reduce its registered capital, Failure to cancel the repurchased shares and reduce the registered capital within ten days from the date of repurchase, as required by law. . Both the Securities Regulatory Commission and the stock exchange have taken action against the company and Chairman, General Manager, and Secretary of the Board Impose a penalty.

III. Failure to Follow the Deliberation Procedures for Amending the Share Repurchase Plan

Except for adjustments to the price ceiling due to rights and dividend adjustments, any modifications to the share repurchase plan—including changes to the repurchase amount, duration, or price ceiling—shall only take effect upon approval by the Board of Directors or the Shareholders’ Meeting.

Case: In August 2024, ZLGF disclosed a share‑repurchase plan. Due to the repurchase not being completed, the deadline was extended twice: first to November 4, 2025; and the second time, with an intention to extend it again and raise the upper limit of the repurchase price, it was not submitted for shareholder approval until November 20, 2025. The Shenzhen Stock Exchange pointed out that, The repurchase amendment plan was not approved by the shareholders’ meeting prior to the expiration of the repurchase implementation period. Furthermore, as of the expiration of the share‑repurchase period, the company had not completed the planned repurchases. The Henan Securities Regulatory Bureau issued a warning letter to the company and to its then‑chairman, general manager, and secretary of the board, with such actions recorded in their integrity files; meanwhile, the Shenzhen Stock Exchange sent regulatory letters to the company’s board of directors, as well as to the then‑chairman, general manager, and secretary of the board.

IV. Inaccurate Disclosure of Share Repurchase Information

Share repurchases entail disclosure obligations at multiple stages, including the plan, progress, completion, and cancellation. Any inaccuracies, incompleteness, or inconsistencies at any stage may trigger regulatory penalties. 。

Case 1: In October 2024, SNGF disclosed a share‑repurchase plan, under which the repurchased shares were intended for cancellation to reduce the company’s registered capital. In April 2025, upon completion of the repurchase, the company announced its intention to cancel, within 12 months, the portion of the repurchased shares used for the reduction in capital. Where a listed company repurchases shares to reduce its registered capital, it must cancel such shares within ten days from the date of acquisition. The information disclosed by the company is inconsistent with the Company Law and other relevant provisions, as it incorrectly stated that the statutory cancellation would be completed within 10 days instead of within 12 months. , and it was not disclosed until September 2025 at the earliest. Notice of Creditor Notification Both the Securities Regulatory Commission and the stock exchange have imposed penalties.

Case 2: *STPD disclosed a share‑repurchase plan in April 2023. On May 10, it replied on the e‑Interaction platform that the funds for the repurchase had been secured; however, the very next day it issued a clarification announcement stating that the conditions for implementing the repurchase were not yet met. On May 19, it further announced that it planned to complete the repurchase by October 23. The company… Announcing a share repurchase plan without adequately demonstrating whether the necessary implementation conditions are in place, and issuing contradictory information regarding the repurchase terms within a short period. The Securities Regulatory Bureau issued a warning letter to the company and recorded it in its integrity file; the Shanghai Stock Exchange issued a public reprimand to the company, as well as to the then-chairman, the then-general manager, and the then-secretary of the board.

In addition, issues such as untimely disclosure of repurchase progress and incomplete content in repurchase completion announcements also persist. Listed companies should ensure the timeliness and completeness of information disclosure at every stage to avoid attracting regulatory scrutiny due to oversight or omissions.

V. The declared price or time period is non-compliant.

When a listed company repurchases shares through centralized bidding, the declared price shall not be Upper limit price , and shall not be in Opening Auction Phase or Day with no price limit Entrust within.

Case: During *STMS’s share repurchase via centralized bidding, the company repurchased shares at the day’s upper limit price. The Zhejiang Securities Regulatory Bureau issued a warning letter to the company and recorded the incident in its integrity file; the Shenzhen Stock Exchange issued a public reprimand.

VI. Using share repurchases to engage in insider trading or market manipulation

Share repurchases constitute inside information. From the time the decision to repurchase is made until it is disclosed, persons who possess such inside information must strictly comply with their confidentiality obligations and may not use share repurchases to engage in insider trading, market manipulation, or other securities‑related violations.

Case: Prior to the formal disclosure of the company’s two share‑repurchase plans, the actual controller of YJGF used insider information to control multiple securities accounts and engaged in trading. The Zhejiang Securities Regulatory Bureau determined that this constituted both insider trading and short‑term trading, ordering the confiscation of illicit gains totaling approximately RMB 550,000 and imposing a fine of approximately RMB 5.85 million. 
 

Share repurchases, as a key tool for market‑capitalization management, have compliance that directly affects market confidence and corporate reputation. Listed companies must learn from past cases, embed compliance awareness throughout the entire repurchase process, thoroughly assess their financial capacity and carefully evaluate implementation conditions when formulating plans, and strictly adhere to statutory procedures and timelines during execution. They should ensure that information disclosure is truthful, accurate, and complete, thereby avoiding regulatory risks arising from inadequate preparation or improper execution.

(This article reflects the author’s personal views and is intended solely for informational purposes; it does not constitute legal advice or an interpretation of the law by JC Master Law Firm. This disclaimer is hereby made.)

This article is published by Jiangsu JC Master Law Firm. The author is Jiangsu JC Master Law Firm, and the copyright belongs to the author. Please cite the original source when reprinting; violations will be prosecuted.

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