China Securities Regulatory Commission, Methods of Competitive Bidding for New Shares Offered Online Guidance Opinion (Draft for Public Comment)

Published: May 17 2001

Main contents: According to the Opinion, new shares may, at the option of the issuer and the lead distributor and subject to verification by the China Securities Regulatory Commission, be open to competitive bidding online (Section One (2)). When this method is used, investors may bid at prices with increments of Rmb0.10 above the reserve issue price determined by the issuer and the lead distributor (Section Two (3)). Each stock account can bid for a minimum of 1000 shares and a maximum of 0.1% of the total shares being offered to the public (Section Two (4)). Only one bid can be made under each account and a bid made is irrevocable (Section Two (5)). A bid must be made on fully-paid basis (Section Two (6)). If the number of shares subscribed by bids equals the total number of shares to be issued, the shares will be issued at the reserve issue price; and if less than that is subscribed, the subscribed shares will be issued at the reserve issue price and the remaining shares will be distributed by the distributing group (Sections Two (7) and Two (8)). The final issue price may be determined in a number of ways, including the over-subscription ratio method, the benchmark price method, and the full competitive method (Section Three).