Measures for the Administration of the Material Asset Restructurings of Listed Companies (2023 Revision)

Measures for the Administration of the Material Asset Restructurings of Listed Companies (2023 Revision)

Order of the China Securities Regulatory Commission
(No. 214)

The Measures for the Administration of the Material Asset Restructurings of Listed Companies, as deliberated and adopted at the 2nd executive meeting of the China Securities Regulatory Commission on February 17, 2023, are hereby issued, and shall come into force on the date of issuance.

Yi Huiman, Chairman of the China Securities Regulatory Commission
February 17, 2023

Annex 1: Measures for the Administration of the Material Asset Restructurings of Listed Companies
Annex 2: Legislative Explanation of the Measures for the Administration of the Material Asset Restructurings of Listed Companies
Measures for the Administration of the Material Asset Restructurings of Listed Companies
(Deliberated and adopted at the 224th chairman's executive meeting of the China Securities Regulatory Commission on March 24, 2008, amended according to the Decision to Amend the Provisions on the Material Asset Restructurings and Supporting Financing of Listed Companies issued by the China Securities Regulatory Commission on August 1, 2011, revised at the 52nd chairman's executive meeting of the China Securities Regulatory Commission on July 7, 2014, amended in accordance with the Decision to Amend the Measures for the Administration of the Material Asset Restructurings of Listed Companies issued by the China Securities Regulatory Commission on September 8, 2016, amended in accordance with the Decision to Amend the Measures for the Administration of the Material Asset Restructurings of Listed Companies issued by the China Securities Regulatory Commission on October 18, 2019, amended in accordance with the Decision to Amend Certain Securities and Futures Rules issued by the China Securities Regulatory Commission on March 20, 2020, and revised at the 2nd executive meeting of the China Securities Regulatory Commission on February 17, 2023)

Chapter I General Provisions

Article 1 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 (hereinafter referred to as the “Securities Law”), and other applicable laws and administrative regulations for the purposes of regulating the material asset restructurings of listed companies, protecting the lawful rights and interests of listed companies and investors, driving listed companies to constantly improve their quality, maintaining the order of the securities market, and protecting the public interest.

Article 2 These Measures shall apply to the asset transaction of a listed company or a company controlled by it, outside its routine operations, by the purchase and sale of assets or other means, causing significant changes in the principal business, assets, or revenues of the listed company (hereinafter referred to as the “material asset restructuring”).
When purchasing assets by offering shares, a listed company shall comply with the provisions of these Measures.
Where a listed company uses the raised funds to purchase assets or make foreign investments according to the uses of raised funds as disclosed in the securities offering documents registered by the China Securities Regulatory Commission (hereinafter referred to as the “CSRC”), these Measures shall not apply.

Article 3 No entity or individual may take advantage of a material asset restructuring to damage the lawful rights and interests of a listed company or its shareholders.

Article 4 In a material asset restructuring of a listed company, all relevant parties shall, in a timely and fair manner, disclose or provide information, and ensure that the information disclosed or provided is true, accurate, and complete and contains no false record, misleading statement, or material omission.

Article 5 In a material asset restructuring of a listed company, its directors, supervisors, and officers shall act in good faith, diligently perform duties, maintain the safety of the assets of the company, and protect the lawful rights and interests of the company and all shareholders.

Article 6 Securities service institutions and personnel that provide services for a material asset restructuring of a listed company shall abide by laws, administrative regulations, relevant rules of the CSRC, and relevant rules of the stock exchange, observe the business standards and ethical norms generally recognized in the industry, act in good faith, diligently perform duties, rigorously perform duties, and undertake responsibilities for the veracity, accuracy, and completeness of the documents prepared or issued by them.
The securities service institutions and personnel as mentioned in the preceding paragraph may not abet, assist, or collude with their clients in preparing or disclosing any report or announcement document containing any false record, misleading statement, or material omission, nor engage in unfair competition, or seek illicit interests by taking advantage of a material asset restructuring of a listed company.

Article 7 Entities and individuals that have access to any information on a material asset restructuring shall, before the information is disclosed in accordance with the law, be obligated to keep it confidential.
No entity or individual may use any information on a material asset restructuring for insider trading, securities market manipulation, or other illegal activities.

Article 8 The CSRC shall supervise and administer the material asset restructurings of listed companies in accordance with the law.
A stock exchange shall develop business rules for the material asset restructurings of listed companies in accordance with the law, and conduct the self-regulation of the material asset restructurings of listed companies and the performance of duties by securities service institutions and personnel.
The CSRC shall, based on the examination opinions of stock exchanges, legally perform registration procedures for the securities offering applications involved in listed companies' offering of shares to purchase assets and supervise the examination work of stock exchanges.

Article 9 Granting registration with respect to a listed company's application for the offering of shares to purchase assets does not indicate a substantial judgment or guarantee of the CSRC or the stock exchange on the investment value of the securities or investors' return, or the guarantee of the CSRC or the stock exchange on the veracity, accuracy, and completeness of the application documents.

Article 10 Buyout funds, equity investment funds, venture capital investment funds, industrial investment funds, and other investment institutions established in accordance with the law are encouraged to participate in the mergers, acquisitions, and restructurings of listed companies.

Chapter II Principles and Criteria for Material Asset Restructurings

Article 11 A listed company undertaking a material asset restructuring shall make a sufficient explanation of this transaction's compliance with the following requirements, and disclose it to the public:
(1) It complies with the industrial policies of the state, and the provisions of laws and administrative regulations on environmental protection, land management, anti-monopoly, foreign investment, and external investment.
(2) It will not result in the company's failure to meet the stock listing conditions.
(3) The pricing of assets involved in the material asset restructuring shall be fair, and there is no damage to the lawful rights and interests of the listed company and its shareholders.
(4) The ownership of assets involved in the material asset restructuring is clear, there is no legal obstacle to the transfer of title to the assets or the transfer of assets, and the relevant claims and debts have been legally handled.
(5) It is conducive to improving the capability of sustained operation of the listed company, and will not result in the circumstance that the major assets of the listed company are cash or the listed company has no specific business after the restructuring.
(6) It is good for the listed company to maintain independence from its actual controller and the affiliates thereof in terms of businesses, assets, finance, personnel, and organization, and it complies with the relevant provisions of the CSRC on the independence of listed companies.
(7) It is good for the listed company to form or maintain a sound and efficient corporate governance structure.

Article 12 The purchase or sale of assets by a listed company or a company controlled by it constitutes a material asset restructuring if it satisfies any of the following criteria:
(1) The total assets purchased or sold account for 50% or more of the ending total assets of the listed company on its audited consolidated financial accounting report for the last accounting year.
(2) The operating revenue generated from the assets purchased or sold in the last accounting year accounts for 50% or more of the operating revenue of the listed company on its audited consolidated financial accounting report for the same period and exceeds 50 million yuan.
(3) The net assets purchased or sold account for 50% or more of the ending net assets of the listed company on its audited consolidated financial accounting report for the last accounting year and exceed 50 million yuan.
Where the purchase or sale of assets fails to satisfy the criteria set forth in the preceding paragraph, but the CSRC discovers any major problem that is suspected of violating any industrial policy of the state, law, or administrative regulation, or the rules of the CSRC, and may damage the lawful rights and interests of the listed company or investors, among others, the CSRC may, under the principle of prudential regulation, order the listed company to suspend the transaction, supplement the relevant information as required by these Measures, or retain an independent financial advisor or any other securities service institution in compliance with the provisions of the Securities Law to conduct further inspection and disclose its professional opinion.

Article 13 Where the purchase of assets by a listed company from the acquirer and the affiliates thereof within 36 months as of the date of change of control results in any of the following fundamental changes to the listed company, such purchase constitutes a material asset restructuring, and the company shall fulfill the relevant obligations and perform the relevant procedures in accordance with the provisions of these Measures.
(1) The total assets purchased account for 100% or more of the ending total assets of the listed company on its audited consolidated financial accounting report for the accounting year immediately preceding the change of control of the listed company.
(2) The operating revenue generated from the purchased assets in the last accounting year accounts for 100% or more of the operating revenue of the listed company on its audited consolidated financial accounting report for the accounting year immediately preceding the change of control of the listed company.
(3) The net assets purchased account for 100% or more of the ending net assets of the listed company on its audited consolidated financial accounting report for the accounting year immediately preceding the change of control of the listed company.
(4) The shares offered for the purchase of assets account for 100% or more of the shares of the trading day immediately before the resolution of the board of directors on the listed company's first purchase of assets from the acquirer and the affiliates thereof is made.
(5) Although the purchase of assets by the listed company from the acquirer and the affiliates thereof does not satisfy the criteria prescribed in subparagraphs (1) through (4), the purchase may result in fundamental changes to the main business of the listed company.
(6) Any other circumstance determined by the CSRC, which may result in fundamental changes to the listed company.
A listed company undertaking a material asset restructuring prescribed in the preceding paragraph shall comply with the following provisions:
(1) It shall comply with the requirements prescribed in Articles 11 and 43 of these Measures.
(2) The business entity from which the assets are purchased by the listed company shall be a joint-stock company or a limited liability company and shall meet other offering conditions set forth in the Measures for the Administration of the Registration of the Initial Public Offerings of Stocks, the positioning of the relevant board, and the specific conditions prescribed by the stock exchange.
(3) Neither the listed company nor its controlling shareholder or actual controller in the last three years is under official investigation by the judicial authority for being suspected of a crime or is under official investigation by the CSRC for being suspected of any violation of law or regulation, unless the suspected crime or violation of law or regulation has been terminated for three years or more, the transaction plan can eliminate the adverse consequences of the conduct, and it does not affect the accountability of the relevant actor.
(4) Neither the listed company nor its controlling shareholder or actual controller has been subject to a public censure by the stock exchange in the last 12 months or has any other serious dishonest conduct.
(5) The material asset restructuring does not fall under any other circumstance determined by the CSRC that may damage investors' lawful rights and interests or is against the principles of openness, fairness, and impartiality.
Where a material asset restructuring as prescribed in paragraph 1 implemented by a listed company involves the offering of shares, the Securities Law and relevant provisions of the CSRC shall apply, but a report shall be filed with the CSRC for registration.
For the purposes of paragraph 1 of this Article, “control” shall be determined in accordance with the provision of Article 84 of the Measures for the Administration of the Takeover of Listed Companies. If a listed company has a decentralized shareholding structure, and its directors and officers may make major financial and business decisions of the company, it shall be determined that they have the right to control the listed company.
Where the assets purchased by the listed company from the acquirer or the affiliate thereof as of the date of change of control fall within the scope of finance, venture capital investment, or any other specific industry, it shall be otherwise prescribed by the CSRC.

Article 14 The criteria as mentioned in Articles 12 and 13 of these Measures shall be calculated in compliance with the following provisions:
(1) If the purchased assets are equities, the total assets shall be the total assets of the investee multiplied by the proportion of shares gained from the investment, or the value of the transaction, whichever is higher, the operating revenue shall be the operating revenue of the investee multiplied by the proportion of shares gained from the investment, and the net assets shall be the net assets of the investee multiplied by the proportion of shares gained from the investment, or the value of the transaction, whichever is higher. If the sold assets are equities, the total assets, operating revenue, and net assets shall be the total assets, operating revenue, and net assets of the investee multiplied by the proportion of shares gained from the investment, respectively.
If the listed company obtains the control of the investee by the purchase of equities, the total assets purchased shall be the total assets of the investee, or the value of the transaction, whichever is higher, the operating revenue shall be the operating revenue of the investee, and the net assets shall be the net assets of the investee, or the value of the transaction, whichever is higher. If the sale of equities leads to the listed company's loss of control of the investee, the total assets, operating revenue, and net assets shall be the total assets, operating revenue, and net assets of the investee, respectively.
(2) If the purchased assets are non-equity assets, the total assets purchased shall be the book value of the assets or the value of the transaction, whichever is higher, and the net assets purchased shall be the difference between the book values of relevant assets and liabilities or the value of the transaction, whichever is higher. If the assets sold are non-equity assets, the total assets sold shall be the book value of the assets, and the net assets sold shall be the difference between the book values of relevant assets and liabilities. If the non-equity assets involve no liabilities, the net assets requirement set forth in subparagraph (3), paragraph 1 of Article 12 of these Measures shall not apply.
(3) If the listed company purchases and sells assets concurrently, the relevant proportions of the assets purchased and sold shall be calculated separately, the higher of which shall be adopted.
(4) If the listed company consecutively purchases and sells the same or related assets in 12 months, the corresponding amounts shall be calculated separately on a cumulative basis, excluding the asset transactions for which the material asset restructuring report has been prepared and disclosed in accordance with these Measures. If the accumulative period and scope of the material asset restructuring set forth in paragraph 1 of Article 13 of these Measures are otherwise prescribed by the CSRC, such provisions shall prevail.
If the assets as the subject matter of the transaction are owned or controlled by the same party, in the same or similar business scope, or under any other circumstance as determined by the CSRC, they may be deemed the same or related assets.

Article 15 For the purpose of Article 2 of these Measures, “asset transactions by other means” include:
(1) forming a new enterprise with others, or increasing or decreasing the capital of the existing enterprises;
(2) being entrusted to operate or lease the assets of other enterprises, or entrusting operating assets to others for operation or lease;
(3) accepting conditional assets donations or donating assets to others; and
(4) other circumstances recognized by the CSRC under the principle of prudential regulation.
If the aforesaid transaction of assets substantially constitutes a purchase or sale of assets and reaches the criteria prescribed in Article 12 or 13 of these Measures, the company shall fulfill the relevant obligations and perform the relevant procedures in accordance with the provisions of these Measures.

Chapter III Procedures for a Material Asset Restructuring

Article 16 When initially negotiating with the other party to the transaction in a material asset restructuring, a listed company shall take effective and sufficient confidentiality measures, develop strict and effective confidentiality rules, and limit the scope of persons having access to relevant sensitive information. If the listed company and the other party to the transaction retain a securities service institution, they shall enter into confidentiality agreements with the retained securities service institution.
Where, before the listed company announces the resolution of the board of directors on the material asset restructuring, the relevant information has been disseminated on media or abnormal fluctuations occur in the trading of the company's stock, the listed company shall immediately announce the relevant plan, scheme, or the status quo of the relevant matters, the relevant progress, and risk factors, among others, and handle other relevant matters in accordance with the relevant information disclosure rules.

Article 17 A listed company shall retain an independent financial advisor, a law firm, an accounting firm, and other securities service institutions in compliance with the provisions of the Securities Law to issue opinions on its material asset restructuring.
The independent financial advisor and the law firm shall prudentially verify whether the material asset restructuring constitutes an affiliated transaction and give definite opinions on the relevant facts verified upon inspection. If the material asset restructuring involves any affiliated transaction, the independent financial advisor shall give definite opinions on the impact of the restructuring on the non-affiliated shareholders of the listed company.
Where the price of the asset transaction is determined based on the asset appraisal result, the listed company shall retain an asset appraisal institution in compliance with the provisions of the Securities Law to issue an asset appraisal report.
Where a securities service institution adopts the professional opinion given by any other securities service institution or personnel in the opinion it issues, it shall conduct due diligence to prudently verify the content of the professional opinion it adopts and be responsible for the conclusion formed based on the aforesaid professional opinion. On the basis of maintaining professional skepticism and conducting prudent verification and necessary investigation and review, the opinion may be reasonably trusted if professional skepticism is excluded.

Article 18 After concluding an employment contract with a securities service institution, a listed company and the other party to the transaction may not change the securities service institution without any justified reason. If they indeed need to change the securities service institution for any justified reason, they shall disclose the specific reason for the change and the opinions stated by the securities service institution.

Article 19 A listed company shall, in the “Discussion and Analysis by the Management” section of the material asset restructuring report, analyze in detail the impact of this transaction on the capability of sustained operation, future development prospect, earnings per share in the current year, and other financial and non-financial indicators of the company. If the purchase of assets is involved, a detailed analysis of the arrangements for the integration, management, and control of the underlying assets of the transaction shall also be made.

Article 20 Where the price of assets involved in the material asset restructuring of a listed company is determined based on the asset appraisal result, the asset appraisal institution shall conduct practice-related activities in accordance with the relevant standards and norms for asset appraisal. The board of directors of the listed company shall give definite opinions on the independence of the appraisal institution, the reasonableness of the appraisal assumptions or preconditions, the relevance between the appraisal method and the appraisal purpose, and the fairness of the appraised price.
Where the price of relevant assets is not determined based on the asset appraisal result, the listed company shall analyze in detail and elaborate in the material asset restructuring report the valuation method, parameters, and other indicators and factors that affect the valuation results of the assets. The board of directors of the listed company shall give definite opinions on the independence of the appraisal institution, the reasonableness of the appraisal assumptions or preconditions, the relevance between the appraisal method and the appraisal purpose, and analyze in detail in the material asset restructuring report the fairness of the transaction price in light of the price of comparable transactions of relevant assets in the market, and the price-to-earnings ratio, price-to-book ratio, or any other generally accepted indicator of listed companies in the same industry.
Under the circumstances set forth in the preceding two paragraphs, in principle, the appraisal or valuation institution shall adopt two or more methods for appraisal or valuation. The independent directors of the listed company shall attend the meeting of the board of directors to give independent opinions on the independence of the appraisal institution, the reasonableness of the appraisal assumptions or preconditions, and the fairness of the transaction price, which shall be disclosed separately.

Article 21 Where a listed company undertakes a material asset restructuring, a resolution shall be made by the board of directors in accordance with the law and be submitted to the shareholders' meeting for approval.
The board of directors of the listed company shall make a definite judgment on whether the material asset restructuring constitutes an affiliated transaction, and disclose the judgment as a subject matter of the resolution of the board of directors.
Independent directors of the listed company shall give independent opinions on the material asset restructuring on the basis of sufficiently gathering the relevant information. If the material asset restructuring constitutes an affiliated transaction, independent direc......