Measures for the Supervision and Administration of State-owned Equities of Listed Companies

Measures for the Supervision and Administration of State-owned Equities of Listed Companies Order of the State-owned Assets Supervision and Administration Commission of the State Council, the Minister of Finance and the China Securities Regulatory Commission (No. 36) The Measures for the Supervision and Administration of State-owned Equities of Listed Companies, as deliberated and adopted at the director's executive meeting of the State-owned Assets Supervision and Administration Commission of the State Council and approved by the Central Leading Group for Comprehensively Deepening Reform, are hereby issued and shall come into force on July 1, 2018. As of the date when the Measures come into force, the Interim Measures for the Administration of the Transfer of Shares of Listed Companies by State-owned Shareholders (Order No. 19, SASAC and CSRC) issued in 2007 shall be repealed concurrently. Director of the State-owned Assets Supervision and Administration Commission of the State Council: Xiao Yaqing Minister of Finance: Liu Kun Chairman of the China Securities Regulatory Commission: Liu Shiyu May 16, 2018 Measures for the Supervision and Administration of State-owned Equities of Listed Companies Chapter I General Provisions Article 1 For the purposes of regulating the changes of state-owned equities of listed companies, promoting the optimized allocation of state-owned resources, equally protecting the lawful rights and interests of all kinds of investors, and preventing the loss of state-owned assets, these Measures are developed in accordance with the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Law of the People's Republic of China on State-owned Assets of Enterprises, the Interim Regulation on the Supervision and Administration of State-owned Assets of Enterprises and other relevant laws and regulations. Article 2 For the purposes of these Measures, “change in the state-owned equity of a listed company” means the change of the shareholding subject, quantity or proportion of the state-owned equity of a listed company, which specifically covers the transfer of shares of a listed company held by a state-owned shareholder through the securities trading system, public collection and transfer, non-public agreement transfer, gratuitous transfer, indirect transfer, and the issuance of exchangeable corporate bonds by the state-owned shareholder, the increase of shareholding by the state-owned shareholder through the securities trading system, the agreement-based acquisition of transferred shares, the indirect acquisition of transferred shares, the acquisition of shares of a listed company by tender offer, the subscription of stocks issued by a listed company, the merger and issuance of securities by a listed company where the state-owned shareholder holds controlling shares, the asset restructuring between the state-owned shareholder and the listed company, and other conduct. Article 3 For the purposes of these Measures, “state-owned shareholder” means an enterprise or entity falling under any of the following circumstances, and its securities account shall be marked with “SS”: (1) Government departments, institutions, public institutions, and wholly state-owned enterprises within the territory of China. (2) The exclusive shareholding by any entity or enterprise mentioned in paragraph 1 exceeds 50% or the aggregate shareholding exceeds 50%, and one of them is the domestic enterprise of the largest shareholder. (3) Wholly-owned enterprises at all levels within China of which the shares are directly or indirectly held by the enterprise as mentioned in paragraph 2. Article 4 The change of state-owned equities of listed companies shall adhere to the principles of openness, fairness and impartiality, abide by the provisions of relevant laws, administrative regulations and rules of the state, conform to the industry policies of the state and the adjustment of the state-owned economic layout and structure, and be conducive to maintaining and increasing the value of state-owned capital, and enhancing the enterprise's core competitiveness. Article 5 The shares involved in the change of state-owned equity of a listed company shall be clear in ownership, and shall not fall under any circumstance restricted by any law or regulation. Article 6 The state-owned assets supervision and administration institution at or above the provincial level shall be responsible for the supervision and administration of changes of state-owned equities of listed companies. The provincial state-owned assets supervision and administration institution may, with the approval of the provincial people's government, transfer the supervision and administration of the change of state-owned equity of a listed company below the prefecture level to the state-owned assets supervision and administration institution at the prefecture level. The provincial state-owned assets supervision and administration institution shall establish a corresponding supervision and inspection work mechanism. Where any change in the state-owned equity of a listed company involves any public administration matter of the government, it shall be reported to the relevant government department for examination in accordance with the law. If the transferee is an overseas investor, it shall satisfy the management requirements of the Catalogue of Industries for Guiding Foreign Investment or the negative list, as well as the provisions on the security review of foreign investment, if such type of circumstances is involved, each examiner shall, after receiving the relevant application, solicit opinions from the commerce department at the same level on whether the transfer complies with the policies on the attraction of foreign investment, and the specific declaration procedures shall be determined by the state-owned assets supervision and administration institution at or above the provincial level in consultation with the commerce department at the same level under the principles determined in the Notice on Issues concerning the Declaration Procedures for the Transfer of State-owned Shares of Listed Companies to Foreign Investors and Foreign-funded Enterprises (No. 1 [2004], MOF). In accordance with laws, administrative regulations and the relevant provisions of the people's government at the same level, the state-owned assets supervision and administration institution shall carry out the procedures for the approval of the matters on the changes of state-owned equities of listed companies approved by the people's government at the same level. Article 7 A state-funded enterprise shall be responsible for managing the following matters: (1) Where a state-owned shareholder transfers its shares of a listed company through the securities trading system, it fails to reach the proportion or quantity as prescribed in Article 12 of these Measures. (2) The gratuitous transfer and non-public agreement transfer of the listed company's shares held by the state-owned shareholder within the enterprise group. (3) The public collection and transfer of shares of a listed company held by the state-owned controlling shareholder, the issuance of exchangeable corporate bonds and the issuance of securities by the listed company where the state-owned controlling shareholder holds controlling shares do not result in the fact that the shareholding ratio is lower than the reasonable shareholding ratio; and the matters on the public collection and transfer of shares of a listed company held by a state-owned equity shareholder and issuance of exchangeable corporate bonds. (4) Matters that do not result in the transfer of control right of a listed company such as the increase of shareholding by a state-owned shareholder through the securities trading system, the agreement-based acquisition of transferred shares, and the subscription of stocks issued by a listed company. (5) The asset restructuring between a state-owned shareholder and the listed company where it holds controlling shares does not fall within the scope of material asset restructuring as prescribed by the CSRC. Article 8 The reasonable ratio of shareholding by a state-owned controlling shareholder (if anyone belongs to the same controller with a state-owned controlling shareholder, the ratio of shares held by them shall be calculated on a consolidated basis) shall be determined by the state-funded enterprise through research, and be reported to the state-owned assets supervision and administration institution for recordation. The specific measures for determining the reasonable shareholding ratio shall be separately formulated by the state-owned assets supervision and administration institution at or above the provincial level. Article 9 A state-owned shareholder which changes the shares of a listed company shall make a plan on the basis of sufficient feasibility study, strictly perform the decision-making and approval procedures, regulate the operation, and perform the information disclosure and other obligations in accordance with the provisions on securities regulation. Before the information on the change of state-owned equity of a listed company is disclosed, all affiliates shall strictly abide by the confidentiality provisions. If any secrecy provision is violated, the relevant persons shall be held liable in accordance with relevant laws and regulations. Article 10 The price of change of state-owned equity of a listed company shall be reasonably determined on the basis of the open trading prices in the securities market, the stock trading price of comparable companies, the net asset value per share and other factors. Article 11 The state-owned assets supervision and administration institution shall conduct uniform supervision of the changes of state-owned equities of listed companies through the state-owned equity management information system of listed companies (hereinafter referred to as the “management information system”). A state-funded enterprise shall, through the management information system, report the changes in the shares of the listed company held by it to the state-owned assets supervision and administration institution in a timely, complete and accurate manner. Among them, the changes that shall be subject to the examination and approval of the state-funded enterprise in accordance with the provisions of these Measures shall be subject to recordation management through the management information system, and a uniformly numbered recordation form shall be obtained. Chapter II Transfer of Shares of a Listed Company Held by a State-owned Shareholder through the Securities Trading System Article 12 Where a state-owned shareholder transfers its shares of a listed company through the securities trading system, it shall make decisions according to the internal decision-making procedures of the state-funded enterprise, and if it falls under any of the following circumstances, shall report it to the state-owned assets supervision and administration institution for examination and approval: (1) The state-owned controlling shareholder's transfer of shares of the listed company may result in the fact that the shareholding ratio is lower than the reasonable shareholding ratio. (2) If the total capital stocks of a listed company do not exceed one billion shares, the accumulative number of shares to be transferred by the state-owned controlling shareholder within one fiscal year (the balance of the accumulative shares transferred minus the accumulative shares increased, here and below) reaches 5% or more of the total capital stocks; or if the total capital stocks of a listed company reach one billion shares, the accumulative number of shares to be transferred by the state-owned controlling shareholder within one fiscal year reaches 50 million shares or more. (3) The accumulative number of shares to be transferred by a state-owned equity shareholder in a fiscal year reaches 5% or more of the total capital stocks of the listed company. Article 13 When a state-funded enterprise or state-owned assets supervision and administration institution decides on or approves a state-owned shareholder's transfer of shares of a listed company through the securities trading system, it shall examine the following documents: (1) The internal decision-making document on the state-owned shareholder's transfer of shares of the listed company. (2) The plan on the state-owned shareholder's transfer of shares of the listed company shall include but not be limited to the necessity of the transfer, the basic information on the state-owned shareholder and listed company, major financial data, the ownership of the shares to be transferred, the base price of the transfer and the basis for determination, the number of the transferred shares, and the time limit for transfer. (3) The feasibility study report on the transfer of shares of the listed company. (4) Other documents deemed necessary by the state-funded enterprise and state-owned assets supervision and administration institution. Chapter III Public Collection and Transfer of Shares of a Listed Company Held by a State-owned Shareholder Article 14 “Public collection and transfer” means a state-owned shareholder's disclosure of information to the public in accordance with the law, and collection of shares of a listed company transferred by the transferee. Article 15 Where a state-owned shareholder plans to publicly collect and transfer the shares of a listed company, it shall, after performing internal decision-making procedures, inform the listed company in writing, and the listed company shall disclose it in accordance with the law and make an announcement. If the public collection and transfer of shares of the listed company by the state-owned controlling shareholder may result in the transfer of control right of the listed company, the state-owned controlling shareholder shall notify the listed company to apply for the suspension of trading. Article 16 After a listed company makes an announcement, the state-owned shareholder shall, in a timely manner, submit the transfer plan, feasibility study report, internal decision-making document, public collection information to be issued, and other content to the state-owned assets supervision and administration institution through the management information system. Article 17 The content of the public collection information shall include but not be limited to the ownership and quantity of the shares to be transferred, the qualification conditions that shall be met by the transferee, the rules for the selection of the transferee, and the period of public collection. The qualification conditions for the transferee in the public collection information shall not set any clause with orientation or against fair competition requirements, and the term of public collection shall not be less than ten trading days. Article 18 The state-owned assets supervision and administration institution shall issue opinions on public collection and transfer matters through the management information system. The state-owned shareholder shall, after obtaining the consent of the state-owned assets supervision and administration institution, notify the listed company in writing to release the information on public collection. Article 19 A state-owned shareholder shall, after receiving the application for the acquisition of transferred shares and transfer acquisition plan submitted by the proposed transferee, form a working group consisting of personnel from internal functional departments and independent external experts in laws and finance, and select and determine the transferee in strict accordance with the announced rules. Article 20 Where the public collection and transfer may lead to the transfer of control right of a listed company, the state-owned shareholder shall retain a securities company or securities investment......