New Rules on Strategic Investments by Foreign Investors in Listed Companies

January 31, 2006 | BY

clpstaff &clp articles

The new rules on foreign strategic investment aim to restore investor confidence in merger and acquisition activity in China. What are the new reforms and how will they assist new investors in Chinese listed companies?

By Jean-Marc Deschandol and Charles Desmeules, Norton Rose, Beijing

The issuance of the Measures for the Administration of Strategic Investment in Listed Companies by Foreign Investors (Circular 28)1 on December 31 2005 is the latest in a series of developments in what has been a busy legislative year for China's stock markets and listed companies. Circular 28 followed another circular2 issued in October 2005, which introduced the concept of foreign 'strategic investors'. Such investors are allowed to acquire tradable A-shares of China-listed companies that have reformed their share capital structure under the September 2005 regulations (the Reform).3 Aimed at further liberalising foreign direct investment in the People's Republic of China's equity markets, Circular 28 is a significant breakthrough that will considerably boost merger and acquisition activity involving target PRC-listed companies.

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