Chinese shares closed down Monday from a one-month high on Friday, mainly due to a move to allow the delisting of companies under ChiNext, China's NASDAQ-style board for growth enterprises.
The benchmark Shanghai Composite Index dropped 0.76 percent, or 18.27 points, to finish at 2,388.59.
The Shenzhen Component Index edged down 0.54 percent, or 54.98 points, to close at 10,076.05.
Combined turnover expanded to 197.99 billion yuan (31.44 billion U.S. dollars) from 181.3 billion yuan the previous trading day.
Losers outnumbered gainers by 619 to 291 in Shanghai and by 1,123 to 258 in Shenzhen.
In a move to better protect investors' interests and boost company management, the Shenzhen Stock Exchange announced late Friday that it has improved rules to allow the delisting of companies on the ChiNext Index starting from May 1.
Companies listed on the board, which started trading in 2009 and mainly lists high-tech companies and those with high growth potential, will be delisted if they are reprimanded by the exchange three times within three years, according to the new rules.
They will also be delisted if the average closing price of their shares falls below face value for consecutive 20 trading days, or if their net assets become negative within two years due to balance sheet correction or false auditing.
The ChiNext Index plunged 5.25 percent to close at 690.43 points.
China's oil shares led the drops, with the sub-index for the sector diving 4.38 percent from the previous trading day.
PetroChina Co., China's largest oil refiner, dropped 1.01 percent to 9.85 yuan per share, while Sinopec, the second-largest, dropped 1.09 percent to 7.27 yuan.
Bucking the trend, shipbuilding companies closed the day with a 4.69-percent surge in the sub-index.
China CSSC Holdings Limited, a major shipbuilder, rose by the 10-percent daily limit to close at 37.04 yuan, while Guangzhou Shipyard International surged 6.6 percent to close at 17.27 yuan.