China issues rules on increased possession of public shares by holders with controlling-shares

China's securities regulator has published regulations on increased possession of the public shares by holders with controlling shares of the same listed firms.

The China Securities Regulatory Commission said the rules were designed to facilitate the ongoing experiments to make the non- tradable stocks tradable, or the reform of split share structure in selected listed firms, and safeguard stability of the stock markets, the legitimate interests of investors and the firms.

Under the rules, holders with controlling shares of a listed firm may increase their possession of the public shares of the same firm in a bid to prevent the irrational fluctuation of their market prices two months after the firm's plan on the experiment is passed by the meeting of shareholders with voting rights.

According to the rules, the plan to increase the possession of the shares by the holders must be made public at the same time the company publishes a program to turn the non-tradable shares of the same company tradable, or introduce the reform of the split share structure, .

The plan must include the purpose of the move by the holders to increase their amount of public shares, the amount of the shares they intend to increase, and the commitments by the holders that the increased amount of the shares will not be sold within six months after the same holders increase their amount of public shares, according to the regulations.

Under the regulations, the holders must make public their moves within two days of the increase deal if the increased amount of the shares in each deal is more than 5 percent of the total corporate shares.

The regulations became effective as of June 16 and is available on the official website of the China Securities Regulatory Commission.

Source: Xinhua