Regulations for split share reform issued

China Securities Regulatory Commission issued the Regulations for Management of Reform on Listed Companies Split Share, which, a CSRC spokesman said, makes adjustment, addition and improvement --- where there is necessary --- on the operation process defined in the pilot projects. Major changes are about:

--- Initiating the reform. Apart from the principle of a unanimous agreement among holders of non-tradable shares on initiating a reform, a motion can be proposed by non-tradable shareholders who, individually or together, own two-thirds of the company's non-tradable share.

--- Shareholders' conference. The "temporary shareholders' conference" mechanism adopted in the pilot projects has been specified as conference of A shareholders concerned. There are also alterations on wording and procedures in this regard.

--- Time of dialogues between non-tradable shareholders and tradable shareholders. Consultation between them should begins on the day of the notice for a shareholders' conference. In the experiment period, views of tradable shareholders were solicited as of the day of the declaration of the reform. The new policy shortens the reform cycle to about 30 days.

--- Limits on revising a reform scheme. The new policy provides that revision is not allowed once the result of consultation is announced and the company's shares are traded again on the market, instead of possible alterations on the reform scheme 15 days before the shareholders' meeting as in the pilot practice. This is designed to guarantee both the full consultation and the integrity of the scheme to avoid any damage to investors' legitimate rights and interests brought about by inequality in information access.

--- De-listing. A company is no longer permitted to choose to have its shares traded again on the market after the resolution of the shareholders' meeting is made public. Shares will not be tradable either during the consultation between shareholders or from the day after the option registration for shareholders' meeting until the end of the process identified by the reform.

The regulation includes necessary measures to prevent non-tradable shareholders from shirking fulfillment of their commitments, one of the major market concerns. It specifies intermediaries' responsibility of supervising over non-tradable shareholders to make sure they perform their obligations. It also clarifies the legal results that non-tradable shareholders or recommending institutions have to face if they fail to perform their responsibilities.

The spokesman stressed that the reform on split share always need improving and the CSRC would summarize its experience to make its supervision more practical as the reform goes further.

By People's Daily Online