|
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.)
| 
