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1.
Drafting background
On August 23, 2005,
the China Securities Regulatory Commission (CSRC),
State-Owned Assets Supervision and Administration
Commission of the State Council, Ministry of
Finance, People's Bank of China and Ministry of
Commerce jointly promulgated the
Guidance Opinions on the Split Share Structure
Reform of Listed Companies
(hereinafter referred to as the “Guidance
Opinions”). The Guidance Opinions specifies that the
CSRC shall enact the Administrative Measures on
the Split Share Structure Reform of Listed Companies
to
standardize the split share structure reform and
protect the legitimate interests of investors,
especially of public investors in compliance with an
“open, fair and just” operational procedure and
regulatory requirements.
2.
Adjustment and improvement in the pilot system
The
Administrative Measures adheres
basically
to the operational
procedure adopted in the pilot phase. To advance the
split share structure reform on an active, steady
and orderly basis and maintain consistency of the
essential system in the pilot phase, the CSRC has
appropriately adjusted, supplemented and improved
the procedure standards and policy orientation
involving the following two aspects, after summing
up the pilot experience and widely soliciting
opinions from the public:
2.1 to further standardize the operational
procedure, including the following five respects:
2.1.1 Reform motion
To achieve more practicability for the split share
structure reform, the prerequisite for carrying out
the reform plan in the pilot phase that “all
non-tradable shareholders shall reach a consensus”
has been adjusted to”
a
shareholder/shareholders holding
individually/collectively more than two-thirds of
the non-tradable shares of a listed company shall
propose a reform motion”.
2.1.2
Collegiate system
In line with the
Guidance Opinions, the split share structure reform
is specifically designed to float the non-tradable
shares of A-share listed companies and to
balance the
interests of shareholders via a negotiation
mechanism. The
Administrative Measures redefines the “extraordinary
general meeting” system adopted in the pilot phase
as the “relevant shareholders’ meeting of A-share
market”.
2.1.3
Schedule of negotiation between non-tradable
shareholders and tradable shareholders
The negotiation
between non-tradable shareholders and tradable
shareholders shall commence as of the date when the
announcement to convene the relevant shareholders’
meeting is publicly disclosed, instead of starting
from the original issue date of the announcement to
pilot the split share structure reform, thus
shortening the reform period to around 30 days.
2.1.4 Revision of the reform plan
Pursuant to the Standard Opinions on General
meeting of Shareholders, the reform plan could
formerly be revised within 15 days before the
extraordinary general meeting is held in the pilot
phase. Now the reform plan shall no longer be
revised after the negotiation results are publicly
released and the share trading of the listed company
is resumed. Such adjustment is made in a bid to
ensure adequate negotiation, maintain stability of
the reform plan and avoid
information asymmetry.
2.1.5 Suspension arrangement
The practice that a listed may choose to have its
share trading resumed after it publicly releases the
resolution on extraordinary general meeting in the
pilot phase has been canceled whereas the suspension
arrangement has been retained for the negotiation
period and another period from the next day of the
record date for the relevant shareholders’ meeting
to the date when the prescribed reform procedure is
concluded.
2.2
to
further clarify policy orientation
The Circular on Issues concerning the Pilot
Reform of the Split Share Structure of Listed
Companies and the Circular on Issues
concerning the Pilot Reform of the Split Share
Structure of the Second Batch of Listed Companies
that were promulgated in the pilot phase focus on
standardizing the basic operational procedure
without specific policy orientation for the reform
plan and relevant main players. In line with the
Guidance Opinions,
the
Administrative Measures provides relevant
policy orientation clarifying the formulation of the
reform plan and the issues involving the coming
reform based on the experience accomplished in the
pilot phase:
2.2.1 to specify that both the current and long-term
interests of shareholders shall be presented in the
reform plan, which shall embrace the measures to
stabilize the stock price, withdrawal of the
non-tradable shareholders in disagreements from the
consideration plan and so on. In the mean time, the
Administrative Measures also provides the path for
combined operation of the split share structure
reform and asset restructuring;
2.2.2 to intensify the responsibilities of sponsors;
2.2.3 to clearly define the basic requirements and
regulatory measures governing the consideration
undertakings of non-tradable shareholders.
Based on the opinions from the public, the CSRC will
further revise the Administrative Measures on the
Split Share Structure Reform of Listed Companies
(Exposure Draft), which will be duly put into
practice.
The China Securities Regulatory Commission
(This English version by Shenzhen Securities
Information Co., Ltd. is for your reference only. In
case any discrepancy exists between the Chinese and
English context, the Chinese version shall prevail.)
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