Shenzhen Stock Exchange, Convertible Bond Listing Rules

Issued: November 1 2002
Effective: as of the date of issue
Interpreting authority: Shenzhen Stock Exchange
Applicability: Convertible bonds are defined as corporate bonds issued in accordance with statutory procedures that may be converted into shares within a set term and in accordance with the agreed conditions (Article 1.2).
Where Part Three of the Shenzhen Stock Exchange, Listing, Trading, Settlement, Conversion and Exchange of Convertible Company Bonds Implementing Rules is inconsistent with the Rules, the Rules shall prevail (Article 7.3).

Main contents: Article 2.1 of the Rules states that an issuer may apply to list its convertible bonds on the stock exchange when the public offering has finished. Article 2.2 sets out a list of documents required to be submitted to the stock exchange for the listing. The listing application must be sponsored by one to two qualified sponsors (Article 2.7).
Part Three concerns information disclosure. It provides some exemptions for the information disclosure obligations (Article 3.9). The information to be disclosed by the issuer includes periodic reports (annual and interim reports) and ad hoc reports, as well as announcements for payment of interest, conversion of bonds to shares, redemption and sell-back. Articles 3.20 and 3.21 also specify how an investor should fulfil its disclosure obligation when its purchase of an issuer's convertible bonds reaches 20% of the issuer's total issue.
Part Four states that an issuer may apply for suspension and resumption of the trading of convertible bonds or the conversion of bonds to shares to the stock exchange for reasons such as holding of shareholders' meeting, merger and acquisition (Articles 4.3 and 4.6). Circumstances that the stock exchange requires suspension, resumption and termination of trading are also set out (Articles 4.4 and 4.7).
Part Five lists the circumstances under which the stock exchange may suspend or terminate the listing of a convertible bond. Disciplinary actions applicable to the issuer, its directors, supervisors, senior management personnel, persons responsible for information disclosure as well as the sponsor are set out in Part Six in relation to violations of the Rules.
Related legislation: PRC Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p21; PRC Securities Law (Amended), Oct 27 2005, CLP 2006 No.1 p31; Administration of Convertible Company Bonds Tentative Procedures, Mar 25 1997, CLP 1997 No.5 p6; Issue of Convertible Bonds By Listed Companies Implementing Procedures, Apr 26 2001, CLP 2001 No.5 p40; Improving the Work Associated with the Issue of Convertible Corporate Bonds by Listed Companies Circular, Dec 25 2001, CLP 2001 No.2 p11; Shenzhen Stock Exchange, Share Listing Rules, Jun 7 2001, CLP 2001 No.6 p17 and Shenzhen Stock Exchange, Listing, Trading, Settlement, Conversion and Exchange of Convertible Company Bonds Implementing Rules, Jul 2 1998, CLP 1998 No.9 p17