State Council, Administration of Reduction of State Share Holdings to Raise Funds for Social Security Tentative Procedures

Promulgated: 12 June 2001
Effective: as of date of promulgation
Applicability: For the purposes of the Procedures, "reduction of State share holdings" means the transfer of State-owned shares (including State shares and State-owned legal person shares) in listed companies to the general public and other private investors such as securities investment funds (Article 2).

Main contents: The Procedures provide that when a domestic or offshore listed company in which the State has shares makes an initial public offering or a new issue, 10% of the issue shall consist of State shares. Where the company has been established for less than three years, the State shares subject to sale shall be sold to the public through the National Social Insurance Fund. All proceeds from such sales shall be turned over to the National Social Insurance Fund, which shall be set up to manage such proceeds and other funding from the central government (Articles 5 and 11). Reduction of State share holdings will be implemented by an inter-ministry council, which will include the State Development Planning Commission, the State Economic and Trade Commission, the Ministry of Finance, the Ministry of Labour and Social Security, the China Securities Regulatory Commission, and the National Social Insurance Fund (Article 7). Upon the effectiveness of the Procedures, transfers of State shares by listed companies through agreement shall be subject to verification by the Ministry of Finance and a certain percentage of the proceeds from such transfers shall be paid to the National Social Insurance Fund (Article 15).