Study on the Stock Delisting Mechanism Triggered by a Share Price Falling Below 1 dollar

Huiru Zhang (), Binran Liu () and Faduan Chen ()
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Huiru Zhang: Shanghai Polytechnic University
Binran Liu: Hebei Normal University Of Science & Technology
Faduan Chen: Shanghai University of Finance and Economics

A chapter in Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025), 2025, pp 573-579 from Springer

Abstract: Abstract As the development and improvement of China’s capital market, the system of “mandatory delisting for stocks with a par value below one dollar” has played a significant role as an important market purification mechanism in promoting survival of the fittest. This article first reviews the historical background and development process of this system, analyzing the significance of Zhonghong Shares as a case of ‘par value delisting’ to the Chinese market. Subsequently, it explores the current status of the system and the problems existing in its implementation, including inadequacies in standards and procedures, low efficiency of market-oriented delisting, and lagging construction of a legal system for delisting. Moreover, this article provides an in-depth analysis of potential risks brought by the system, such as investor losses, corporate financing difficulties, and damage to market confidence. On this basis, the article proposes several recommendations, including establishing a differentiated delisting system under a multi-level market framework, building a differentiated quantitative delisting indicator system tailored to different market segments, improving laws and regulations to protect investors’ rights and interests, and strengthening the market supervision system. Finally, the article calls for adhering to the concept of legal reform, improving the construction of the delisting system, and utilizing various measures to effectively protect the legitimate rights and interests of investors to achieve the healthy and sustainable development of the capital market.

Keywords: Par value of shares; delisting system; stock market; investor protection; legal reform (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-702-1_60

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