A paper announcement of companies listed on GEM has attracted the attention of the industry to “entrusted financial management”.
On January 21, Guangdong Kingstrong Technology Co.Ltd(300629) announced that it had received a letter of regulatory concern from Guangdong securities regulatory bureau to inquire about the non-standard disclosure of entrusted financial information.
The announcement disclosed that from October 2019 to may 2020, the company used its own funds for entrusted financial management of about 421 million yuan, of which 311 million yuan was notice deposit. Guangdong Securities Regulatory Bureau determined that although the relevant call deposit products are time deposits in form, they have certain financial product attributes, which should be fully considered and classified into the cumulative amount of entrusted financial management according to the situation for disclosure.
A partner of a well-known accounting firm told the Shanghai Securities News that at present, the accounting standards do not define entrusted financial management or financial management attributes, so it is difficult to directly judge whether call deposit is a financial product from the perspective of accounting, which may be understood differently by regulators and listed companies.
How to define call deposit and whether it belongs to the category of financial products?
According to the statistical classification and coding of deposits (Trial Implementation) issued by the central bank in 2010, call deposits belong to a kind of deposits. According to the definition of the policy, call deposit refers to the deposit in which the depositor opens an account with a financial institution to deposit funds or currency, and the financial institution issues a deposit certificate, which does not agree on the deposit period. When withdrawing, it is necessary to notify the financial institution in advance to agree on the withdrawal date and amount.
In addition to call deposits, similar products include certificates of deposit, agreement deposits and other products. Zhou Yiqin, a senior financial regulatory policy expert, said that according to the caliber of the central bank, certificates of deposit and agreement deposits are also classified as deposit products.
A partner of a well-known accounting firm in Shanghai told reporters: “notice deposits have always been managed as deposits. The management of deposits and financial products, whether regulatory or legal, are parallel, not cross.”
He said that the measures for the supervision and administration of financial services of commercial banks issued by the CBRC in 2018 divided financial products into fixed income financial products, equity financial products, commodity and financial derivatives financial products and hybrid financial products, which did not include informed deposit products.
On January 7, 2022, Shenzhen Stock Exchange issued the notice of self regulatory guidelines for listed companies of Shenzhen Stock Exchange No. 7 – transactions and related party transactions, which defined “entrusted financial management”, “Refers to the behavior that a listed company entrusts banks, trusts, securities, funds, futures, insurance asset management institutions, financial asset investment companies, private fund managers and other professional financial institutions to invest and manage its property or purchase relevant financial products”.
Since the definition of notice deposit and entrusted financial management is controversial in the industry, how should listed companies improve information disclosure? The above-mentioned partners of Shanghai accounting firm suggest that when disclosing information, listed companies may consider disclosing call deposit products in accordance with the letter Phi standard of entrusted financial management.
