Yesterday, the reporter learnt from the Shanghai Stock Exchange (SSE) that the SSE’s Listed pany Department had begun to anize the disclosure of the 2008 annual reports. It is learnt that listed panies would be required to carry out the SSE’s two disclosure initiatives in their annual reports, which would step up the enhancement of system establishment of the listed panies as well as regulation and auracy of their information disclosure. Some listed panies will additionally report on social responsibility.

The SSE plans to introduce social responsibility report and internal ntrol self-appraisal report in some listed panies’ 2008 annual reports.

Aording to the “Announcement of Disclosing Listed panies’ Social Responsibility Report and Internal ntrol Self-appraisal Report in 2008” (the Announcement) issued recently by the Listed pany Department to all listed panies, the measure is aimed to enurage the listed panies to actively assume the social responsibilities and further to establish a sound internal ntrol system, thus improving the rporate ernance level over all.

Aording to the Announcement, three kinds of panies are required to submit the two reports together with the 2008 annual reports, which include  sample panies in SSE ernance Sector, panies who issue overseas listed shares and financial panies. Statistics show that there are 269 SSE-listed panies fall within these three types, that is over 30% of the SSE-listed panies. At the same time, the SSE enurages other panies to voluntarily disclose these two reports.

The Announcement also requires that the secretaries to directorate of the listed panies shall timely assist all directorate members to get a good knowledge of the requirements for preparing the social responsibilities report and internal ntrol report and well prepare for making and disclosing these two reports. The directorates of the listed panies shall make separate resolutions on these two reports in addition to discussion about the annual reports. The SSE will further define the requirements for disclosing these two reports in its Announcement of the 2008 annual reports.

Statistics show that the year 2007 was the first year that the SSE-listed panies exercised the SSE’s internal ntrol directive and 139 panies disclosed the internal ntrol reports in their 2007 annual reports, while some large scale panies took initiatives in disclosing the social responsibility reports. In June 2008, it was made clear that the first “Basic Regulation on rporate Internal ntrol” jointly issued by the five ministries and missions would be applied to listed panies from July 1, 2009. nsequently, a growing number of listed panies are actively establishing sound rporate internal ntrol systems.

An SSE official expressed that there were two reasons for requiring some listed panies to disclose internal ntrol reports and social responsibility reports together with annual reports. First, it shall prepare for the application of the aforesaid “Basic Regulations on rporate Internal ntrol” in all panies. Send, it is a mon requirement of international capital markets. The reason why it will be implemented first by the three kinds of panies is that they have already made relatively sound disclosure. Among them, 231 panies are nstituents of the SSE ernance Sector and have strict requirements for their rporate internal ntrol. And financial panies have more detailed internal ntrol standards thanks to their industry standards. Their lead action will bee models for other panies to establish sound internal ntrol systems and to fulfill their social responsibilities.

The official also pointed out that since the introduction of internal ntrol reports, the format and length of the reports of different panies have differed dramatically. In order to achieve regulation, the SSE will introduce a uniform format and introduce the standards of “ncise ntent, definite responsibility and clarified issues” in the near future. In terms of social responsibility report, the SSE will issue relevant directive. Besides, in order to improve the efficiency of reviewing the two reports by the directors of listed panies and strengthen the aountability for their review, the SSE will also introduce another working paper on directorate review to notify directors of taking care of key issues in the two reports.The format of annual reports will be more favorable for supervision.

The SSE plans to require the disclosure of listed panies’ annual reports in XBRL (extensible Business Reporting Language) format in all SSE listed panies. Specifically, the SSE requires all SSE-listed panies to disclose the 2008 annual reports in two electronic files, regular PDF files and XBRL instance documents, and both files will be displayed simultaneously on the SSE web

Relevant official from the SSE Listed pany Department told the reporter that XBRL is the latest standard and technology for processing the unstructured information, especially financial information. XBRL technology was firstly used in the 2003 annual report abstracts for information disclosure of listed panies, when the SSE selected some Shanghai-based listed panies as pilots. Only after less than two years, during the disclosure of the 2005 annual reports, all SSE-listed panies realized the standardized submission of all periodical reports in XBRL format. Since June 2008, XBRL has also been used in two types of ad hoc announcements. It is worth mentioning that previously, XBRL data were mainly used in internal supervision of the SSE. This year the SSE decided to start to disclose annual reports in XBRL format to the public, thus promoting wider and deeper application of XBRL.

To guarantee the suess of the plan, the SSE made quite a lot of preparations. Firstly, based on the symposium and plete investigation, in aordance with the needs of the listed panies in their disclosure of the 2008 annual reports, the SSE has held four training urses for preparing annual report in Shanghai and Guangzhou since December 26 and required the listed panies and the aounting firms undertaking annual report auditing to attend the urses. Sendly, the SSE assigned professional staff to pile guidance documents on ntent and format of disclosed financial reports of listed panies, in a bid to solve the difficulties in users’ information extraction and use caused by dramatic differences in ntent and formats of financial reports submitted by various panies. Thirdly, from the beginning of this year’s annual report disclosure, the SSE web will offer professional tools to assist web visitors in reading the ntent in the XBRL instance documents and provide download function of part of the instance documents to facilitate investors’, especially professional investors’ better research and analysis of information in annual reports by means of XBRL technology.

Moreover, the official said, from the perspective of annual report supervisors, XBRL technology improves the quality of annual reports and is favorable for supervision. The SSE unified the formats of financial reports, especially their annotations, thus preventing mistakes in a preemptive manner. Meanwhile, the automatic verification function of XBRL technology can prevent the unintentional faults caused by the listed panies during the preparation of financial reports, thus helping to improve the quality of disclosure of financial reports and rce the number of the unnecessary modification announcements afterwards.  

The official believed that, as a result of the implementation of the SSE’s initiatives, the disclosure of periodical reports of listed panies would be more aurate and regulated.