【发布单位】商务部、中国证券监督管理委员会、国家税务总局、国家工商行政管理总局、国家外汇管理局
  【发布文号】-----------
  【发布日期】2005-12-31
  【生效日期】2005-01-30
  【失效日期】-----------
  【所属类别】国家法律法规
  【文件来源】商务部
 

外国投资者对上市公司战略投资管理办法

 (商务部、中国证券监督管理委员会、国家税务总局、国家工商行政管理总局、国家外汇管理局令2005年第28号)


　　商务部、中国证监会、国家税务总局、国家工商总局、国家外汇局制定了《外国投资者对上市公司战略投资管理办法》，现予以发布，自发布之日起30日后施行。

　　　　　　　　　　　　　　　　　　　　　　　商 务 部 　　　部长
　　　　　　　　　　　　　　　　　　　　　　　中国证监会　　 主席
　　　　　　　　　　　　　　　　　　　　　　　国家税务总局　 局长
　　　　　　　　　　　　　　　　　　　　　　　国家工商总局　 局长
　　　　　　　　　　　　　　　　　　　　　　　国家外汇管理局 局长
　　　　　　　　　　　　　　　　　　　　　　　二OO五年十二月三十一日


外国投资者对上市公司战略投资管理办法

　　第一条 为了规范股权分置改革后外国投资者对A股上市公司（以下简称上市公司）进行战略投资，维护证券市场秩序，引进境外先进管理经验、技术和资金，改善上市公司治理结构，保护上市公司和股东的合法权益，按照《关于上市公司股权分置改革的指导意见》的要求，根据国家有关外商投资、上市公司监管的法律法规以及《外国投资者并购境内企业暂行规定》，制定本办法。

　　第二条 本办法适用于外国投资者（以下简称投资者）对已完成股权分置改革的上市公司和股权分置改革后新上市公司通过具有一定规模的中长期战略性并购投资（以下简称战略投资），取得该公司A股股份的行为。

　　第三条 经商务部批准，投资者可以根据本办法对上市公司进行战略投资。

　　第四条 战略投资应遵循以下原则：

　　（一）遵守国家法律、法规及相关产业政策，不得危害国家经济安全和社会公共利益；

　　（二）坚持公开、公正、公平的原则，维护上市公司及其股东的合法权益，接受政府、社会公众的监督及中国的司法和仲裁管辖；

　　（三）鼓励中长期投资，维护证券市场的正常秩序，不得炒作；

　　（四）不得妨碍公平竞争，不得造成中国境内相关产品市场过度集中、排除或限制竞争。

　　第五条 投资者进行战略投资应符合以下要求：

　　（一）以协议转让、上市公司定向发行新股方式以及国家法律法规规定的其他方式取得上市公司A股股份；

　　（二）投资可分期进行，首次投资完成后取得的股份比例不低于该公司已发行股份的百分之十，但特殊行业有特别规定或经相关主管部门批准的除外；

　　（三）取得的上市公司A股股份三年内不得转让；

　　（四）法律法规对外商投资持股比例有明确规定的行业，投资者持有上述行业股份比例应符合相关规定；属法律法规禁止外商投资的领域，投资者不得对上述领域的上市公司进行投资；

　　（五）涉及上市公司国有股股东的，应符合国有资产管理的相关规定。

　　第六条 投资者应符合以下要求：

　　（一）依法设立、经营的外国法人或其他组织，财务稳健、资信良好且具有成熟的管理经验；

　　（二）境外实有资产总额不低于1亿美元或管理的境外实有资产总额不低于5亿美元；或其母公司境外实有资产总额不低于1亿美元或管理的境外实有资产总额不低于5亿美元；

　　（三）有健全的治理结构和良好的内控制度，经营行为规范；

　　（四）近三年内未受到境内外监管机构的重大处罚（包括其母公司）。

　　第七条 通过上市公司定向发行方式进行战略投资的，按以下程序办理：

　　（一）上市公司董事会通过向投资者定向发行新股及公司章程修改草案的决议；

　　（二）上市公司股东大会通过向投资者定向发行新股及修改公司章程的决议；

　　（三）上市公司与投资者签订定向发行的合同；

　　（四）上市公司根据本办法第十二条向商务部报送相关申请文件，有特殊规定的从其规定；

　　（五）在取得商务部就投资者对上市公司进行战略投资的原则批复函后，上市公司向中国证监会报送定向发行申请文件，中国证监会依法予以核准；

　　（六）定向发行完成后，上市公司到商务部领取外商投资企业批准证书，并凭该批准证书到工商行政管理部门办理变更登记。

　　第八条 通过协议转让方式进行战略投资的，按以下程序办理：

　　（一）上市公司董事会通过投资者以协议转让方式进行战略投资的决议；

　　（二）上市公司股东大会通过投资者以协议转让方式进行战略投资的决议；

　　（三）转让方与投资者签订股份转让协议；

　　（四）投资者根据本办法第十二条向商务部报送相关申请文件，有特殊规定的从其规定；

　　（五）投资者参股上市公司的，获得前述批准后向证券交易所办理股份转让确认手续、向证券登记结算机构申请办理登记过户手续，并报中国证监会备案；

　　（六）协议转让完成后，上市公司到商务部领取外商投资企业批准证书，并凭该批准证书到工商行政管理部门办理变更登记。

　　第九条 投资者拟通过协议转让方式构成对上市公司的实际控制，按照第八条第（一）、（二）、（三）、（四）项的程序获得批准后，向中国证监会报送上市公司收购报告书及相关文件，经中国证监会审核无异议后向证券交易所办理股份转让确认手续、向证券登记结算机构申请办理登记过户手续。完成上述手续后，按照第八条第（六）项办理。

　　第十条 投资者对上市公司进行战略投资，应按《证券法》和中国证监会的相关规定履行报告、公告及其他法定义务。

　　第十一条 投资者对其已持有股份的上市公司继续进行战略投资的，需按本办法规定的方式和程序办理。

　　第十二条 上市公司或投资者应向商务部报送以下文件：

　　（一）战略投资申请书（格式见附件1）；

　　（二）战略投资方案（格式见附件2）；

　　（三）定向发行合同或股份转让协议；

　　（四）保荐机构意见书（涉及定向发行）或法律意见书；

　　（五）投资者持续持股的承诺函；

　　（六）投资者三年内未受到境内外监管机构重大处罚的声明，以及是否受到其他非重大处罚的说明；

　　（七）经依法公证、认证的投资者的注册登记证明、法定代表人（或授权代表）身份证明；

　　（八）经注册会计师审计的该投资者近三年来的资产负债表；

　　（九）上述（一）、（二）、（三）、（五）、（六）项中规定提交的文件均需经投资者法定代表人或其授权代表签署，由授权代表签署的还应提交经法定代表人签署的授权书及相应的公证、认证文件；

　　（十）商务部规定的其他文件。

　　前款所列文件，除第七项、第八项所列文件外，必须报送中文本原件，第七项、第八项所列文件应报送原件及中文译件。

　　商务部收到上述全部文件后应在30日内作出原则批复，原则批复有效期180日。

　　第十三条 符合本办法第六条规定的外国公司（"母公司"）可以通过其全资拥有的境外子公司（"投资者"）进行战略投资，投资者除提交本办法第九条所列文件外，还应向商务部提交其母公司对投资者投资行为承担连带责任的不可撤销的承诺函。

　　第十四条 投资者应在商务部原则批复之日起15日内根据外商投资并购的相关规定开立外汇账户。投资者从境外汇入的用于战略投资的外汇资金，应当根据外汇管理的有关规定，到上市公司注册所在地外汇局申请开立外国投资者专用外汇账户（收购类），账户内资金的结汇及账户注销手续参照相关外汇管理规定办理。

　　第十五条 投资者可以持商务部对该投资者对上市公司进行战略投资的批准文件和有效身份证明，向证券登记结算机构办理相关手续。

　　对于投资者在上市公司股权分置改革前持有的非流通股份或在上市公司首次公开发行前持有的股份，证券登记结算机构可以根据投资者申请为其开立证券账户。

　　证券登记结算机构应根据本管理办法制定相应规定。

　　第十六条 投资者应在资金结汇之日起15日内启动战略投资行为，并在原则批复之日起180日内完成战略投资。

　　投资者未能在规定时间内按战略投资方案完成战略投资的，审批机关的原则批复自动失效。投资者应在原则批复失效之日起45日内，经外汇局核准后将结汇所得人民币资金购汇并汇出境外。

　　第十七条 战略投资完成后，上市公司应于10日内凭以下文件到商务部领取外商投资企业批准证书：

　　（一）申请书；

　　（二）商务部原则批复函；

　　（三）证券登记结算机构出具的股份持有证明；

　　（四）上市公司营业执照和法定代表人身份证明；

　　（五）上市公司章程。

　　商务部在收到上述全部文件之日起5日内颁发外商投资企业批准证书，加注"外商投资股份公司（A股并购）"。

　　如投资者取得单一上市公司25％或以上股份并承诺在10年内持续持股不低于25％，商务部在颁发的外商投资企业批准证书上加注"外商投资股份公司（A股并购25％或以上）"。

　　第十八条 上市公司应自外商投资企业批准证书签发之日起30日内，向工商行政管理机关申请办理公司类型变更登记，并提交下列文件：

　　（一）公司法定代表人签署的申请变更申请书；

　　（二）外商投资企业批准证书；

　　（三）证券登记结算机构出具的股份持有证明；

　　（四）经公证、认证的投资者的合法开业证明；

　　（五）国家工商行政管理总局规定应提交的其他文件。

　　经核准变更的，工商行政管理机关在营业执照企业类型栏目中加注"外商投资股份公司（A股并购）"字样，其中，投资者进行战略投资取得单一上市公司25％或以上股份并承诺在10年内持续持股不低于25%的，加注"外商投资股份公司（A股并购25％或以上）"。

　　第十九条 上市公司应自外商投资企业营业执照签发之日起30日内，到税务、海关、外汇管理等有关部门办理相关手续。外汇管理部门在所颁发的外汇登记证上加注"外商投资股份公司（A股并购）"。如投资者进行战略投资取得单一上市公司25％或以上股份并承诺在10年内持续持股不低于25%的，外汇管理部门在外汇登记证上加注"外商投资股份公司（A股并购25％或以上）"。

　　第二十条 除以下情形外，投资者不得进行证券买卖（B股除外）：

　　（一）投资者进行战略投资所持上市公司A股股份，在其承诺的持股期限届满后可以出售；

　　（二）投资者根据《证券法》相关规定须以要约方式进行收购的，在要约期间可以收购上市公司A股股东出售的股份；

　　（三）投资者在上市公司股权分置改革前持有的非流通股份，在股权分置改革完成且限售期满后可以出售；

　　（四）投资者在上市公司首次公开发行前持有的股份，在限售期满后可以出售；

　　（五）投资者承诺的持股期限届满前，因其破产、清算、抵押等特殊原因需转让其股份的，经商务部批准可以转让。

　　第二十一条 投资者减持股份使上市公司外资股比低于25%，上市公司应在10日内向商务部备案并办理变更外商投资企业批准证书的相关手续。

　　投资者减持股份使上市公司外资股比低于10%，且该投资者非为单一最大股东，上市公司应在10日内向审批机关备案并办理注销外商投资企业批准证书的相关手续。

　　第二十二条 投资者减持股份使上市公司外资股比低于25%,上市公司应自外商投资企业批准证书变更之日起30日内到工商行政管理机关办理变更登记，工商行政管理机关在营业执照上企业类型调整为"外商投资股份公司（A股并购）"。上市公司应自营业执照变更之日起30日内到外汇管理部门办理变更外汇登记，外汇管理部门在外汇登记证上加注"外商投资股份公司（A股并购）"。

　　投资者减持股份使上市公司外资股比低于10％，且投资者非为单一最大股东，上市公司自外商投资企业批准证书注销之日起30日内到工商行政管理机关办理变更登记，企业类型变更为股份有限公司。上市公司应自营业执照变更之日起30日内到外汇管理部门办理外汇登记注销手续。

　　第二十三条 母公司通过其全资拥有的境外子公司进行战略投资并已按期完成的，母公司转让上述境外子公司前应向商务部报告，并根据本办法所列程序提出申请。新的受让方仍应符合本办法所规定的条件，承担母公司及其子公司在上市公司中的全部权利和义务，并依法履行向中国证监会报告、公告及其他法定义务。

　　第二十四条 投资者通过A股市场将所持上市公司股份出让的，可凭以下文件向上市公司注册所在地外汇局申请购汇汇出：

　　（一）书面申请；

　　（二）为战略投资目的所开立的外国投资者专用外汇账户（收购类）内资金经外汇局核准结汇的核准件；

　　（三）商务部出具的关于上市公司股权结构变更的批复文件；

　　（四）证券经纪机构出具的有关证券交易证明文件。

　　第二十五条 投资者持股比例低于25%的上市公司，其举借外债按照境内中资企业举借外债的有关规定办理。

　　第二十六条 相关政府机构工作人员必须忠于职守、依法履行职责，不得利用职务便利牟取不正当利益，并对知悉的商业秘密负有保密义务。

　　第二十七条 香港特别行政区、澳门特别行政区、台湾地区的投资者进行战略投资，参照本办法办理。

　　第二十八条 本办法自发布之日起30日后施行。
 

 
Administrative Measures Concerning Strategic Investment of Foreign Investors in Listed Companies

      The "Administrative Measures Concerning Strategic Investment of Foreign Investors in Listed Companies" formulated by the Ministry of Commerce, China Securities Regulatory Commission, State Administration of Taxation, State Administration for Industry and Commerce and State Administration of Foreign Exchange was promulgated on December 31, 2005, and shall take effect in 30 days after the date of promulgation.

 

Article 1. The Measures have been promulgated following the requirements of the ¡§Guiding Opinions on Split Equity Structure Reform of Listed Companies¡¨ and pursuant to relevant laws and regulations of the state concerning supervision over foreign investment and listed companies and the Provisional Rules on Acquisition of Enterprises in the Territory by Foreign Investors, with a view to standardising the strategic investment of foreign investors in A‑share listed companies (hereinafter referred to as ¡§listed companies¡¨) after the split equity structure reform, safeguarding the order on the securities market, letting in advanced management skills, technology and capital from outside the territory, improving the governance structure of listed companies and protecting the legitimate rights and interests of listed companies and their shareholders.

 

Article 2. The Measures are applicable to an act in which a foreign investor (hereinafter referred to as ¡§investor¡¨) acquires A‑shares of a listed company having completed the split equity structure reform and a company newly listed after the split equity structure reform through medium‑ and long‑term strategic merger and acquisition investment (hereinafter referred to as ¡§strategic investment¡¨) with a considerable scale.

 

Article 3. With the approval of the Ministry of Commerce, an investor is permitted to make strategic investment in listed companies pursuant to the Measures.

 

Article 4. The following principles shall be abided by in making strategic investment:

 

1) Abidng by laws and regulations of the state and related industrial policies, and not causing harm to the economic security of the state and public interests;

 

2) Adhering to the principles of openness, justness and fairness, safeguarding the legitimate rights and interests of the listed companies and their shareholders, and accepting the supervision by the government and the public and China¡¦s judicial and arbitral jurisdiction;

 

3) Encouraging medium‑ and long‑term investment, safeguarding the normal order on the securities market, and prohibiting speculation;

 

4) Not hindering fair competition, and not causing excessive market concentration of related products in the Chinese territory, or excluding or restraining competition.

 

Article 5. When making strategic investment, an investor shall comply with the following requirements:

 

1) Acquiring A‑shares of a listed company through negotiated transfer, private placement of new shares by a listed company or other forms as stipulated by laws and regulations of the state;

 

2) The investment shall be made by installments, with the proportion of shares acquired after completion of the first installment of investment not to be lower than 10% of the shares already issued by the said company. There may, however, be exceptions for special industries for which there are special stipulations or approval has been obtained from the competent authorities;

 

3) The A‑shares of a listed company acquired shall not be negotiated within three years;

 

4) For industries for which laws and regulations have definite stipulations on the proportion of foreign‑invested equities, the proportion of shares held by an investor in the said industries shall comply with the related stipulations; for fields in which foreign investment is banned by laws and regulations, an investor is prohibited from investing in the listed companies in the said fields;

 

5) Where holders of state‑owned shares in a listed company are involved, related stipulations on administration of state assets shall be observed.

 

Article 6. An investor shall meet the following requirements:

 

1) Being a foreign legal person or other organisation that has been established and operating according to law, with steady financial status, good credit status and mature management experience;

 

2) Having actual total assets of no less than US$100 million outside the territory or managing actual total assets of no less than US$500 million outside the territory; or its parent company has actual total assets of no less than US$100 million outside the territory or manages actual total assets of no less than US$500 million outside the territory;

 

3) Having sound governance structure and good internal control system, and having standardised operations;

 

4) Not receiving any significant penalty from supervision authorities in and outside the territory in the latest three years (including its parent company).

 

Article 7. Where strategic investment is made through the form of private placement by a listed company, it shall be handled according to the following procedures:

 

1) The board of directors of the listed company adopts resolutions to make a private placement of new shares to the investors and on the draft for revising the articles of association of the company;

 

2) The general meeting of shareholders of the listed company adopts resolutions on making private placement of new shares to the investors and on revising the articles of association of the company;

 

3) The listed company and the investors sign a contract on the private placement;

 

4) The listed company submits the related application documents to the Ministry of Commerce pursuant to Article 12 of the Measures, and where there are special stipulations, the said stipulations shall prevail;

 

5) After receiving a reply, in principle, from the Ministry of Commerce concerning the strategic investment of the investors in the listed company, the listed company shall submit the issuance application documents to the China Securities Regulatory Commission, and the China Securities Regulatory Commission will give ratification according to law;

 

6) After the private placement is completed, the listed company shall take the certificate of approval for foreign‑invested enterprise from the Ministry of Commerce, and also handle the alteration registration with the administration for industry and commerce upon presentation of the said certificate of approval.

 

Article 8. Where strategic investment is made through the form of negotiated transfer, it shall be handled according to the following procedures:

 

1) The board of directors of the listed company adopts the resolution on the strategic investment of the investors through the form of negotiated transfer;

 

2) The general meeting of shareholders of the listed company adopts the resolution on the strategic investment of the investors through the form of negotiated transfer;

 

3) The transferring parties and the investors sign a contract on the equity transfer;

 

4) The investors submit the related application documents to the Ministry of Commerce pursuant to Article 12 of the Measures, and where there are special stipulations, the said stipulations shall prevail;

 

5) When making equity investment in the listed company, the investors shall after receiving the aforesaid approval handle the equity transfer confirmation procedures with the stock exchange, apply to handle the ownership transfer registration procedures with the securities registration and clearing organisation, and also make a report to the China Securities Regulatory Commission for the record.  

 

6) After the negotiated transfer is completed, the listed company shall take the certificate of approval for foreign‑invested enterprise from the Ministry of Commerce, and also handle the alteration registration with the administration for industry and commerce upon presentation of the said certificate of approval.

 

Article 9. Where an investor is to constitute actual control over a listed company through the form of negotiated transfer, it shall after receiving approval pursuant to the procedures as said in items 1), 2), 3) and 4) of Article 8, submit to the China Securities Regulatory Commission the Report on Acquisition of the Listed Company with related documents, and after examination by the China Securities Regulatory Commission that shows no disagreement handle the equity transfer confirmation procedures with the stock exchange and apply to handle the ownership change registration procedures with the securities registration and clearing organisation. After the aforesaid procedures are completed, the procedures as stipulated in item 6) of Article 8 shall be handled.

 

Article 10. When making strategic investment in a listed company, an investor shall carry out the reporting, announcement and other statutory obligations pursuant to the Securities Law and related stipulations of the China Securities Regulatory Commission.

 

Article 11. When making further strategic investment in a listed company in which it already holds shares, an investor shall handle it according to the forms and procedures stipulated by the Measures.

 

Article 12. The listed company or the investor shall submit the following documents to the Ministry of Commerce:

 

1) the form of application for the strategic investment (See Appendix 1 for the formula);

 

2) the programme for the strategic investment (See Appendix 2 for the formula);

 

3) the contract for the private placement or the agreement for the share transfer;

 

4) a letter of opinion issued by the recommender (for private placement), or a letter of legal opinion;

 

5) a letter of commitment to continuous holding of shares made by the investor;

 

6) a declaration that the investor did not receive any significant penalty from supervision authorities in and outside the territory during the latest three years, s well as a statement on whether or not it received any other non‑significant penalty;

 

7) the certificate for registration of the investor and the identification certificate of its legal representative (or his or her authorised representative) that have been notarised and certified according to law;

 

8) the balance sheets of the said investor for the latest three years that have been audited by certified public accountants;

 

9) the documents required for submission as stipulated in the aforesaid items 1), 2), 3), 5) and 6) shall all be signed by the legal representative of the investor or his or her authorised representative, and where they are signed by the authorised representative, submission of the letter of authorisation signed by the legal representative and related notary and certification documents is necessary;

 

10) other documents as stipulated by the Ministry of Commerce.

 

The documents listed in the preceding paragraph, except for those listed in items 7) and 8), shall be the original copies in Chinese, while the documents listed in items 7) and 8) shall be the original copies and their translated versions in Chinese.

 

The Ministry of Commerce shall make a reply in principle within 30 days after receiving all aforesaid documents, and the said reply in principle shall be valid for a period of 180 days.

 

Article 13. A foreign company (¡§parent company¡¨) complying with the stipulations in Article 6 of the Measures is permitted to make strategic investment through a wholly‑owned overseas subsidiary (¡§investor¡¨). The investor shall, in addition to submitting the documents as listed in Article 9 of the Measures, also submit to the Ministry of Commerce an irrevocable letter of commitment made by its parent company with regard to shouldering joint liabilities for the investing act of the investor.

 

Article 14. The investor shall open a foreign exchange account pursuant to the stipulations related to foreign‑invested mergers and acquisitions within 15 days starting from the day when the Ministry of Commerce gives a reply in principle. The investor shall, pursuant to related foreign exchange management stipulations, file an application with the local foreign exchange administration at the registration place of the listed company for opening a special foreign exchange account for foreign investors (acquisition category) with regard to the foreign exchange money used for the strategic investment that is remitted in by the investor from outside the territory. Related foreign exchange management stipulations shall be referred to in handling the exchange settlement of the money in the account and the account cancellation procedures.

 

Article 15. The investor may handle related procedures with the securities registration and clearing organisation by presenting the document of approval to the said investor¡¦s strategic investment in the listed company issued by the Ministry of Commerce and valid identification certificates.

 

With regard to the non‑negotiable shares held by an investor prior to the split equity structure reform of a listed company or the shares held prior to the initial public offering of a listed company, the securities registration and clearing organisation may open a securities account for the investor upon the latter¡¦s application.

 

The securities registration and clearing organisation shall formulate related stipulations pursuant to the Administrative Measures.

 

Article 16. The investor shall commence its strategic investment within 15 days starting from the day when its foreign exchange capital is changed into the local currency, and also complete the strategic investment within 180 days starting from the day when the reply in principle is given.

 

Where the investor fails to complete its strategic investment according to the strategic investment programme within the prescribed time, the reply in principle given by the approval organ will lose effect automatically. The investor shall upon ratification by the foreign exchange administration purchase foreign exchange with the Renminbi money received from changing its foreign exchange capital into the local currency and also remit it outside the territory within 45 days starting from the day when the reply in principle loses effect.

 

Article 17. After the strategic investment is completed, the listed company shall within 10 days take the certificate of approval for foreign‑invested enterprise from the Ministry of Commerce by presenting the following documents:

 

1) the application form;

 

2) the reply in principle given by the Ministry of Commerce;

 

3) the certificate for holding the shares issued by the securities registration and clearing organisation;

 

4) the business license of the listed company and the identification certificate of its legal representative;

 

5) the articles of association of the listed company.

 

The Ministry of Commerce shall grant the certificate of approval for foreign‑invested enterprise, as well as adding the words of ¡§foreign‑invested stock company (merger and acquisition of A‑shares)¡¨, within five days after all aforesaid documents are received.

 

Where an investor acquires 25% or more shares of a single listed company and also commits to keep its holding at no less than 25% within a period of ten years, the Ministry of Commerce shall add on the certificate of approval for foreign‑invested enterprise it grants the words of ¡§foreign‑invested stock company (merger and acquisition of 25% or more A‑shares)¡¨.

 

Article 18. Within 30 days starting from the day when the certificate of approval for foreign‑invested enterprise is issued, the listed company shall apply to handle the company type alteration registration with the administrative organ for industry and commerce, and also submit the following documents:

 

1) the application form for alteration signed by the legal representative of the company;

 

2) the certificate of approval for foreign‑invested enterprise;

 

3) the certificate for holding the shares issued by the securities registration and clearing organisation;

 

4) the certificate for lawful opening to business of the investor that has been notarised and certified;

 

5) other documents necessary for submission as stipulated by the State Administration for Industry and Commerce.

 

If alteration is ratified, the administrative organ for industry and commerce will add in the column of enterprise type on the business license the words of ¡§foreign‑invested stock company (merger and acquisition of A‑shares)¡¨, including adding the words of ¡§foreign‑invested stock company (merger and acquisition of 25% or more A‑shares)¡¨ where an investor acquires 25% or more shares of a single listed company and also commits to keep its holding at no less than 25% within a period of ten years.

 

Article 19. Within 30 days starting from the day when the business license for foreign‑invested enterprise is issued, the listed company shall handle related procedures with the taxation, customs, foreign exchange administration and other related departments. The foreign exchange registration certificate issued by the foreign exchange administration department shall have the words of ¡§foreign‑invested stock company (merger and acquisition of A‑shares)¡¨ added. Where an investor acquires 25% or more shares of a single listed company in its strategic investment and also commits to keep its holding at no less than 25% within a period of ten years, the foreign exchange administrative department shall add on the foreign exchange registration certificate the words of ¡§foreign‑invested stock company (merger and acquisition of 25% or more A‑shares)¡¨.

 

Article 20. Except for the circumstances as follows, an investor is prohibited from buying and selling the securities (excluding B‑shares):

 

1) The A‑shares of a listed company held by an investor through strategic investment may be sold upon expiration of the committed holding term;

 

2) If the investor is to make n acquisition in the form of tender offer pursuant to related stipulations of the Securities Law, it may acquire the shares sold by the A‑share holders of the listed company during the term of tender offer;

 

3) The non‑negotiable shares held by the investor prior to the split equity structure reform of the listed company may be sold after the split equity structure reform is completed and the period of sale limitation expires;

 

4) The shares held by the investor before the listed company makes the initial public offering may be sold after the period of sale limitation expires;

 

5) If the shares of the investor need to be transferred for bankruptcy, liquidation, mortgage and other special causes prior to expiration of its committed share holding term, they may be sold with the approval of the Ministry of Commerce.

 

Article 21. Where an investor reduces its holding of shares and it causes the foreign capital equity of the listed company to be less than 25% thereof, the listed company shall put it on record at the Ministry of Commerce within ten days and also handle the related procedures for alteration of the certificate of approval for foreign‑invested enterprise accordingly.

 

Where the investor reduces its holding of shares and it causes the foreign capital equity of the listed company to be less than 10% thereof, and also the said investor is not the largest single shareholder, the listed company shall put it on record with the approval organ within ten days and also handle the related procedures for cancellation of the certificate of approval for foreign‑invested enterprise.

 

Article 22. Where an investor reduces its holding of shares and it causes the foreign capital equity of the listed company to be less than 25% thereof, the listed company shall handle the alteration registration procedures with the administrative organ for industry and commerce within 30 days starting from the day when the certificate of approval for foreign‑invested enterprise is altered. The administrative organ for industry and commerce shall adjust the enterprise type on the business license to ¡§foreign‑invested stock company (merger and acquisition of A‑shares)¡¨. The listed company shall handle alteration of foreign exchange registration with the foreign exchange administration department within 30 days starting from the day when the business license is altered. The foreign exchange administration department shall add the words of ¡§foreign‑invested stock company (merger and acquisition of A‑shares)¡¨ on the foreign exchange registration certificate.

 

Where the investor reduces its holding of shares and it causes the foreign capital equity of the listed company to be less than 10% thereof, and also the said investor is not the largest single shareholder, the listed company shall handle the alteration registration with the administrative organ for industry and commerce within 30 days starting from the day when the certificate of approval for foreign‑invested enterprise is cancelled, with the type of enterprise altered to stock limited company. The listed company shall handle the foreign exchange registration cancellation procedures with the foreign exchange administration department within 30 days starting from the day when the business license is altered.

 

Article 23. In cases where the parent company makes strategic investment through its wholly owned subsidiary outside the territory and the said investment has been completed on schedule, if the parent company transfers the aforesaid subsidiary outside the territory, it shall give a report to the Ministry of Commerce in advance, and also file an application pursuant to the procedures listed in the Measures. The new receiving party shall also comply with the conditions as stipulated by the Measures, shouldering all the rights and obligations in the listed company of the parent company and its subsidiary, as well as carrying out according to law the obligations of reporting to the China Securities Regulatory Commission, making an announcement and other statutory obligations.

 

Article 24. Where an investor transfers its holding f shares in a listed company through the A‑share market, it may apply to the local foreign exchange administration at the registration place of the listed company for purchasing and remitting out foreign exchange by presenting the following documents:

 

1) The application in writing;

 

2) The certificate of approval for exchange settlement ratified by the foreign exchange administration for the money in the special foreign exchange account for foreign investor (acquisition category) opened for the purpose of strategic investment;

 

3) The document of reply on alteration of the equity structure of the listed company issued by the Ministry of Commerce;

 

4) Certification documents related to securities transactions issued by a securities brokerage organisation.

 

Article 25. For a listed company in which an investor holds less than 25% of its shares, its foreign debts shall be handled according to stipulations related to foreign debts of Chinese capital enterprises in the territory.

 

Article 26. Concerned working staff of government organs must be devoted to their duties and carry out their duties according to law. They are prohibited from seeking unlawful gains by taking advantage of their posts, and are also obliged to keep commercial secrets confidential.

 

Article 27. The Measures are also applicable to the strategic investment made by investors from the Hong Kong Special Administrative Region, Macao Special Administrative Region and  Taiwan region.

 

Article 28. The Measures shall take effect in 30 days after their promulgation.

 
 
New Rules on Strategic Investments by Foreign Investors in Listed Companies
China Law & Practice. London: Feb 2006. pg. 1
Full Text (2314  words)
Copyright Euromoney Institutional Investor PLC Feb 2006

The new rules on foreign strategic investment aim to restore investor confidence in merger and acquisition activity in China. What are the new reforms and how will they assist new investors in Chinese listed companies?

By Jean-Marc Deschandol and Charles Desmeules, Norton Rose, Beijing

The issuance of the Measures for the Administration of Strategic Investment in Listed Companies by Foreign Investors (Circular 28) 1 on December 31 2005 is the latest in a series of developments in what has been a busy legislative year for China's stock markets and listed companies. Circular 28 followed another circular 2 issued in October 2005, which introduced the concept of foreign'strategic investors'. Such investors are allowed to acquire tradable A-shares of China-listed companies that have reformed their share capital structure under the September 2005 regulations (the Reform). 3 Aimed at further liberalising foreign direct investment in the People's Republic of China's equity markets, Circular 28 is a significant breakthrough that will considerably boost merger and acquisition activity involving target PRC-listed companies.

Far beyond QFIIs

Before Circular 28, only a limited number of foreign financial institutions holding a qualified foreign institutional investor (QFII) status could legally purchase tradable A-shares of PRC listed companies. 4 Foreign investors not holding a QFII status could only acquire a stake in listed companies by privately purchasing non-tradable state holdings. 5 Under Circular 28, a totally different type of equity investment from the comparatively short-term share, trading under the existing QFII scheme, is targeted. Furthermore, Circular 28 also subjects strategic foreign investments to much lower entry requirements and to fewer investment restrictions than QFIIs. For instance, Circular 28 technically allows strategic foreign investors to control a listed company, while QFIIs are not permitted to hold more than 10% of the issued share capital of a listed company.

No cap on foreign participation

A foreign strategic investor must acquire a minimum of 10% of all the shares of the target listed company. Circular 28 does not set a foreign shareholding cap on strategic investments, but as a general requirement, the strategic investment must comply with the Foreign Investment Industrial Guidance Catalogue as well as with the ceiling percentages set out in any industry-specific regulations.

However, foreign strategic investments can only be made in the few listed companies that have so far fully implemented the Reform. 6 Also, the shares acquired by a foreign strategic investor under Circular 28 whether by private share transfer or private placement are subject to a three-year lockup period (compared with one to three years for QFIIs), except in circumstances specifically approved by the Ministry of Commerce (MOFCOM). After the three-year lockup period expires, if the foreign strategic investor wishes to exit the listed company, the listed company must obtain MOFCOM's approval regarding the change of its share capital structure.

Strategic investors' qualifications

When first introduced in Circular 565, the concept of strategic investment may have led some to think that onerous qualification requirements would be imposed on strategic investors. On the contrary, Circular 28 introduces requirements that are surprisingly investor-friendly. In terms of quantitative requirements, the foreign investor (or its holding company) must own offshore assets of at least US$100 million or manage offshore assets of at least US$500 million. The strategic investor must be an existing legal corporate entity or other form of organization, and must also comply with a range of prudential conditions that are standard in PRC regulations. 7

As an additional move in the right direction, Circular 28 expressly allows a foreign investor to make a strategic investment in a PRC-listed company through a "wholly-owned subsidiary located outside China ", even where the subsidiary would not itself comply with the qualification requirements. In this case, the parent company must commit itself to take joint and several liability with its wholly-owned offshore subsidiary.

Share transfer or private placement?

Under Circular 28, a strategic investment in a listed company by a foreign investor can be performed:

(i) by a private share transfer agreement between existing shareholder(s) and the foreign investor;

(ii) by a private placement by the listed company to the foreign investor, or

(iii) by "any other method as allowed by PRC law".

Other than specific references to acquisition by share transfer or by private placement, Circular 28 is silent as to the nature of the other methods which could be used to achieve a strategic investment. Interestingly, the PRC Securities Law, which came into effect on January 1 2006, uses a similar expression and refers to a general takeover offer as "a method allowed by PRC law". However, it is unlikely that foreign strategic investors will be able to purchase a significant stake directly in the secondary market, at least in the short term.

Despite the new opportunities offered by Circular 28, foreign investors will find it extremely difficult, in the next three to four years, to obtain controlling stakes in PRC-listed companies by private share transfer. Indeed, the transfer of shares recently floated on the Shanghai and Shenzhen stock exchanges as a result of the implementation of the Reform ('G-shares', from gai ge, the Chinese word for reform) since April 2005, will be subject to a full one-year lockup period. 8 In the 12 months following the end of this lockup period, holders of G-shares will only be allowed to trade up to 5% of the company's total shareholding, and up to 10% in the following 24 months. Only after these three years will holders of G-shares be able to transfer significant controlling stakes to foreign investors.

In the meantime, strategic investments will need to find a way through private placements. Article 13 of the PRC Securities Law provides that listed companies privately issuing new shares to a designated investor must comply with conditions set in regulations issued by the China Securities Regulatory Commission (CSRC). Until these detailed regulations on private placements are issued, which is expected to happen in the first half of 2006, general guidance on private placements will be found in Circular 28 and in the PRC Company Law, which came into effect on January 1 2006.

Dual general offer requirement

Under Circular 28, only an acquisition by share transfer, which results in the foreign investor becoming the effective controlling shareholder of the listed company, is subject to the general offer requirement. However, if an acquisition by private placement results in the foreign investor becoming the effective controlling shareholder of the listed company, the acquisition would be subject to a general offer requirement under the PRC Securities Law. In this case, the strategic investor can apply to CSRC for a waiver of the general offer obligation under the Measures for Administration of the Takeover of Listed Companies (Takeover Measures), which came into effect on December 1 2002. However, it remains to be seen how CSRC will handle such an application.

Unfortunately, Circular 28, the PRC Securities Law and the Takeover Procedures refer to different general offer trigger events. Article 9 of Circular 28 refers to'effective control' as the trigger of the general offer requirement, while the PRC Securities Law and the Takeover Measures both refer to a 30% shareholding. Consequently, even without reaching 30%, foreign investors obtaining'effective control' as a result of a strategic investment may be required to satisfy the requirement to make a general offer.

acquisition Payment

The greatest concern arising out of Circular 28 is the apparent lack of flexibility regarding the method of payment for the acquisition. Pursuant to Article 14, the payment of the acquisition price must be made in foreign currency and no other payment method is mentioned. Although Circular 28 provides for the possibility of paying by instalments, foreign investors should take note that the transaction must be completed within 180 days of receiving MOFCOM's approval.

Considering the PRC's longstanding preoccupation with attracting and controlling foreign exchange, payment with the foreign strategic investor's own shares does not seem to be a possibility under Circular 28, despite the fact that Article 9 of the Merger with and Acquisition of Domestic Enterprises by Foreign Investors Tentative Provisions 9 provides that a foreign investor, with the approval of the foreign exchange control authorities, may use shares over which it has the right of disposal as a means of payment for an acquisition. References to payment with shares are also found in the Takeover Measures. 10

It remains to be seen how Circular 28 will interact with the forthcoming cross-border share swap regulations. 11 Although these regulations have not been promulgated yet, it is expected they will only allow for shares of PRC entities to be exchanged against shares of overseas listed companies or shares of offshore special purpose vehicles established by domestic companies for the purpose of offshore listing.

Two-tier FIE-status

Circular 28 reiterates the pre-existing distinction between partial and full foreign-invested enterprise (FIE) status, depending on the foreign participation in the listed company. If a foreign strategic investor holds 25% or more of a listed company and commits itself to retain at least 25% in the subsequent 10 years, the listed company will be granted full FIE status. Unfortunately, tax preferential treatment, which is the major interest of holding the FIE status, is unlikely to benefit listed companies with full FIE status. 12

Listed companies with foreign shareholdings between 10% and 25% will only partially qualify as FIEs and will be treated as domestic companies in a broad range of circumstances, for example, when contracting foreign debt or when conducting foreign exchange transactions. Listed companies must apply for the cancellation of their FIE status if their foreign participation falls below 10%.

Looking ahead

The introduction of the strategic investment concept is undoubtedly a significant development which will considerably encourage M&A activity involving PRC-listed companies. It provides a much better alternative to QFIIs, which are of limited use to foreign investors wishing to hold a significant stake in a target listed company. However, the level of activity will remain difficult to predict until a greater proportion of the companies listed on the Shanghai and Shenzhen stock exchanges have implemented the Reform. In the meantime, PRC regulators are expected to issue rules on cross-border share swaps and on private placements by listed companies. Together with Circular 28, these forthcoming regulations will further boost M&A activity involving PRC-listed companies.

Endnotes

1 Circular 28 was jointly issued by the Ministry of Commerce (MOFCOM), the China Securities Regulatory Commission (CSRC), the State Administration of Taxation (SAT), the State Administration of Industry and Commerce (SAIC) and the State Administration of Foreign Exchange (SAFE) on December 31 2005, effective January 30 2006.

2 Matters Relevant to the Administration of Foreign Capital Involved in the Reform of the Division of Equity Interests of Listed Companies Circular (Circular 565 - jointly issued by MOFCOM and CSRC, effective October 26 2005).

3 On April 29 2005, CSRC launched a pilot reform according to which non-tradable shares in selected companies were floated on stock exchanges in Shanghai and Shenzhen as tradable shares held by public shareholders. On September 4 2005, CSRC issued the Administration of Listed Companies Stock Right Allocation Reform Method, extending the Reform to all listed companies.

4 Administration of Investments in Domestic Securities by Qualified Foreign Institutional Investors Tentative Regulations (jointly issued by CSRC and the People's Bank of China on November 5 2002, effective December 1 2002 ).

5 Matters Relevant to Foreign Investment in Listed Companies Several Opinions (jointly issued by MOFCOM's predecessor, the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and CSRC, effective November 8 2001); Matters Relevant to the Transfer of State-owned Shares and Legal Person Shares in Listed Companies to Foreign Investors Circular (jointly issued by the CSRC, the Ministry of Finance (MOF) and the former State Economic and Trade Commission (SETC), effective November 1 2002).

6 As of February 7 2006, only 57 of the 833 companies listing A-shares on the Shanghai Stock Exchange (SSE) have implemented the Reform and another 52 companies have notified the SSE of their intention to do so. These numbers are likely to increase in the short term.

7 These prudential conditions are: "having financial stability and be of good standing"; "having conducted operations in a lawful way"; having established "complete corporate governance and internal control systems", and having "no record of material penalty being imposed by any regulatory authority" either in its domestic jurisdiction or any other jurisdiction during the three years preceding the strategic investment.

8 The decision to take advantage of the Reform rests with the listed company's holders of non-tradable shares: at least two-thirds of holders of non-tradable shares must put forward a joint motion requiring the company's board of directors to convene a shareholders' meeting. The decision to float the company's non-tradable shares must then be approved by two-thirds of all shareholders (including two-thirds of holders of tradable shares) attending the shareholders' meeting.

9 These provisions were jointly issued by MOFCOM, SAT, SAIC and SAFE, effective April 12 2003.

10 Article 35 of the Takeover Measures.

11 MOFCOM, SAIC and SAFE are currently jointly engaged in the drafting of regulations on the cross-border exchange of shares between domestic and foreign companies. A draft version of the regulations was circulated in April 2005.

12 Under the Matters Relevant to the Transfer of State-owned Shares and Legal Person Shares of Listed Companies to Foreign Entities Circular (jointly issued by CSRC, the Ministry of Finance and the State Economic and Trade Committee on November 1 2002), listed companies with a foreign shareholding exceeding 25% are not entitled to the preferential tax treatment granted to FIEs. Despite that SAT took part in the drafting and issuance of Circular 28, the circular does not indicate whether the tax treatment will be different for a listed company where a foreign investor holds more than 25% of the shares as a result of a strategic investment. However, it is likely that the same principles will apply and that no preferential tax treatment will be available.
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