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Our Ref: No. 32 [2005]
CSRC
To: Listed Companies, Shareholders of Listed Companies,
Sponsors, China Securities Depository & Clearing Co.,
Ltd.
With a view to carrying out the
Guidelines on Promoting Reform, Opening-up and Steady
Development of China's Capital Market
(No.3 [2004] the State Council), (the “Guidelines”) and
addressing the problem of listed companies split share
structure, the pilot reform of
listed companies split share structure (the “Pilot
Reform”) is now formally initiated.
The Pilot
Reform shall be carried out in accordance with the
basic
principle set out in the Guidelines---- “Approaches
towards this problem (listed companies split share
structure) shall conform to the way the securities
market works, promote the smooth functioning and
development of the securities market, and provide
effective protection for investors, especially, the
public investors”. Practice policies for the Pilot
Reform include Sustained Development of Securities
Market, Fairness and Uniformity of Rules, Adequate
Negotiation in Developing the Reform Plan, Approval for
the Reform Plan by Floating Shareholders, and Gradual
Implementations. This Circular provides the following
procedures and requirements that should be followed in
conducting the Pilot Reform:
1.
To maintain the smooth functioning of the securities
market and protect the interests of investors,
especially those of public investors, the China
Securities Regulatory Commission (the CSRC) shall select
the listed companies (the Pilot Company) that are
allowed to undertake the Pilot Reform taking into
consideration the attitude of listed companies
shareholders towards the Pilot Reform as well as
sponsors’ recommendations. Shareholders of the selected
Pilot Company may formulate specific approaches towards
the split share structure problem independently.
2.
The Pilot Company shall make timely, true, precise, and
full disclosure of information on the Pilot Reform, and
apply for share trading suspension or resumption at
appropriate time. Specifically, the Pilot Company shall:
2.1
make an immediate public announcement and apply for
share trading suspension upon the event that the
formal decision to undertake the Pilot Reform is
reached;
2.2
publish documents relating to the Pilot Reform within
two working days upon passing of the Board resolution on
the reform plan, i.e. Resolution of the Board of
Directors, Opinions of Independent Directors, Prospectus
for the Pilot Reform, Opinions of the Sponsor, Notice of
the Extraordinary General Meeting in connection with the
Pilot Reform (the EGM), and apply for share trading
resumption. The Pilot Company shall apply for share
trading suspension during the period as of the record
date for the EGM until the release of the Result of the
EGM.
2.3
publish the Result of the EGM within 2 working days and
apply for share trading resumption upon passing of the
resolution on the reform plan at the EGM. The Pilot
Company may apply to the stock exchange to extend the
trading suspension on account of the particular
circumstances of the Pilot Reform.
3.
Necessary measures as follows shall be taken to enable
participation and exercise of rights by floating
shareholders in the EGM:
3.1
Informing floating shareholders of their rights, the
time, conditions and forms for exercise of rights in the
Notice of the EGM
3.2
Issuing notices of the EGM for at least three times
prior to the EGM, and availability of on-line voting
facilities
3.3
Solicitations of proxies with respect to the reform plan
by independent directors
3.4
Majority votes required for passing the Board resolution
on the reform plan-- two-third majority of votes cast by
shareholders voting at the EGM, and a two-third majority
of votes by floating shareholders voting at the EGM
4.
The Board of the Pilot Company shall engage a sponsor to
assist in formulating a reform plan, conduct due
diligence, review documents, provide sponsor’s opinions,
and assist in the implementation of the reform plan. The
sponsor shall designate at least 3 sponsor
representatives for the purpose of the Pilot Reform.
5.
Non-floating shareholders of the Pilot Company shall
undertake to float their non-floating shares that are
granted the listing status (the Shares) in phases, and
shall perform disclosure obligations during the course.
5.1
Non-floating shareholders of the Pilot Company shall
undertake not to sell or transfer the Shares for a
12-month period from the date their non-floating shares
are granted listing status
5.2
Non-floating shareholders who hold 5% or more stakes in
the Pilot Company shall undertake to limit the number of
the Shares disposed through the secondary market to 5%
of the total share capital of the Pilot Company for 12
months and 10% for 24 months following expiry of
the12-month trading restriction period set out in
paragraph 5.1 of the Circular
5.3
A public announcement shall be made within 3 working
days upon the event that the number of the Shares
disposed through the secondary market reaches 1% of the
total share capital of the Pilot Company. Disposal of
the Shares may proceed during the announcement period.
6.
The approval of competent authorities for the disposal
of non-floating shares of the Pilot Company, where
applicable, shall be obtained and published prior to the
convening of the EGM.
7.
The stock exchange and securities depository & clearing
company shall establish operating guidelines for the
Pilot Reform respectively in line with the requirements
in the Circular, and handle the work relating to the
listing of the Shares.
The stock exchange shall conduct a compliance review on
the Pilot Reform documents submitted by the Pilot
Company, and exercise continuous supervision over
disclosures in connection with disposal of the Shares by
the ex-non-floating shareholders of the Pilot Company.
8.
Directors and shareholders of the Pilot Company shall,
in carrying out the Pilot Reform, act with integrity and
undertake that, there is no fraud, misleading
statements, or material omissions in their disclosures.
Listed companies shall neither undertake the Pilot
Reform unless authorized to do so, nor publish
misleading information in connection with the Pilot
Reform, and shall make prompt clarification on false
media reports.
9.
The Pilot Reform sponsor and the sponsor representatives
shall exercise diligence in execution of their duties
and responsibilities related to the Pilot Reform, and
undertake that there is no fraud, misleading statements
or material omissions in the Sponsor’s Opinions.
10.
The CSRC supervises over the activities and works
related to the Pilot Reform, and will
take
administrative actions against senior management of the
Pilot Company, the sponsor and its representatives
involved in the Pilot Reform, and listed companies for
violation of the requirements set out in the Circular,
and abuse of the Pilot Reform for insider trading,
market manipulation, or other fraudulent securities
transactions.
Criminal procedures will be initiated against suspected
criminal offences.
11. The Circular shall come into force as of the date of
promulgation.
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.) |
