China Overhauls Takeover Code of Listed Companies

China's new Takeover Code aims to boost domestic and cross-border merger and acquisition activities involving PRC-listed companies. It imposes stringent information disclosure requirements to improve transparency and clarifies rules to make the acquisition process more efficient.

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

The China Securities Regulatory Commission (CSRC) issued the Acquisition of Listed Companies Administrative Procedures (Takeover Code) on July 31 2006. The Takeover Code became effective as of September 1 2006 and repealed the old procedures (Old Takeover Code), which had been effective since December 1 2002. The Takeover Code unifies provisions under a single piece of legislation, which were previously spread out over numerous circulars and regulations. In addition, this much welcomed piece of housekeeping legislation clarifies rules on partial offers, widens the 'concerted action' concept, updates rules on offer exemptions, regulates indirect acquisitions and redefines the role of financial advisers.