The Chinese capital market is heading for further maturity as the central regulators aim to optimize the independent director system and tackle listed companies' possible misconduct, thereby improving A-share companies' quality, said experts.

According to a guideline released by the State Council, China's Cabinet, on April 14, a reform will be carried out to optimize independent directors' roles in decision-making, advisory and supervision.

According to the guideline, independent directors should pay special attention to the major conflicts of interest between controlling stakeholders, actual controllers, directors and senior executives. They should supervise key areas such as related-party transactions, financial accounting reports, appointments and dismissals of directors and senior executives to protect the company's overall interests, especially those of smaller shareholders, it said.

Independent directors, also known as outsider directors who are not involved in listed companies' day-to-day operations and have no material relationship with the company, are projected to bring unique and unbiased perspectives to listed companies. Latest data from market tracker Wind Info showed that the more than 5,100 A-share companies have provided 15,934 independent director positions.

Chen Yunsen, a professor at the Central University of Finance and Economics, said that independent directors of A-share companies used to lack professional input and independence. The latest reform aims to alter that situation, which is crucial to corporate governance.

The guideline has shown the regulators' emphasis on checks and balances as well as investor protections. Listed companies' quality will be improved, which will help create a wholesome circulation within the Chinese capital market and facilitate China's high-quality economic development, he said.

The maturity of the Chinese capital market can also be reflected by the delisting of Essence Information Technology and Amethystum Storage Technology, the first two STAR Market companies to be removed.

According to the written decision of administrative penalty released by the China Securities Regulatory Commission on Friday, Essence Information Technology, which started trading on the STAR Market in June 2020, concealed important facts and fabricated major false content in its securities issuance documents. There were also false records and major omissions in its financial reports for 2020 and 2021.

Amethystum Storage Technology, which went public on the STAR Market in February 2020, has committed fraudulent issuance and information disclosure violations. Both companies have thus attracted delisting action regarding major violations.

Huang Zihan, senior strategist at Shenwan Hongyuan Securities, said the STAR Market has set stricter delisting rules as it is projected to nurture technology innovation catering to the country's major strategies. The two companies are unlikely to go public again.

This should serve as a warning for companies with listing plans or in the listing process. Investors can also be reassured that the registration-based IPO mechanism is strict in regulatory and information disclosure requirements, she said.

Reflecting regulators' zero tolerance for behavior impairing investor interests, the first two delisting cases on the STAR Market also show the gradual formation of the normalized delisting mechanism in the A-share market, which is aimed to improve the overall quality of the A-share companies, said Xun Yugen, chief economist of Haitong Securities.

The new delisting rules were released at the end of 2020. Some 46 companies were delisted from the A-share market last year, a record high.

The benchmark Shanghai Composite Index shed 0.78 percent on Monday while the Shenzhen Component Index closed 1.17 percent lower.

Analysts from China International Capital Corp Ltd said the recent market adjustments will not alter their positive outlook on the overall A-share market performance. Companies are expected to see their profitability further improve in the second quarter amid the strong credit data and robust GDP recovery in the first quarter, they said.