China Securities Regulatory Commission, Working Guidelines for the Review in Connection with Administrative Licensing of Securities Companies No.10: Review Requirements for Securities Companies' Share Capital Increase and Change of Shareholders and De Facto Controllers with 5% or More of Equity
中国证券监督管理委员会证券公司行政许可审核工作指引第10号–证券公司增资扩股和变更持有5％以上股权的股东、实际控制人的审核要求
December 18, 2008 | BY
clpstaff &clp articles &Qualifications required for purchase of 5% or more of equity in a securities company.
Issued: May 9 2008
Main Contents: Article 1 of the Guidelines states that where a securities company increases its share capital or there is a change of a shareholder or de facto controller with 5% or more of the company's equity, the following requirements shall be fulfilled:
(1) Prudential regulatory requirements on the share purchase by the purchasing shareholder (including the shareholder that increases its share capital or the equity transferee):
(a) The equity structure of the purchasing shareholder shall be disclosed to the ultimate equity holder, and the purchasing shareholder's affiliated relationships with other shareholders and its relationships with persons acting in concert shall be fully disclosed. The securities company may not circumvent the review of qualifications of shareholders with a shareholding of 5% or more by not disclosing its de facto control over several shareholders with less than 5% of the company equity. The securities company's equity may not be indirectly held by any overseas organisation without approval.
(b) The purchasing shareholder may not have equity participation in more than two securities companies, and may not hold a controlling share in more than one securities company. Insurance companies, commercial banks and trust and investment corporations that have equity participation in securities companies shall fulfil the policy requirements on equity participation in securities companies by financial institutions.
(c) If the controlling shareholder or de facto controller of the securities company increases its share capital or acquires company equity, it shall undertake that it will not transfer the securities company's equity it holds within 60 months from the date it begins holding the equity.
Where a listed securities company increases its share capital by way of a public offering of shares (including initial public offering and public offering of new shares), conversion of publicly-offered convertible bonds to shares, and exercise of publicly offered warrants, the capital increase by shareholders whose shareholding will be less than 5% after the capital increase shall be exempted from the aforementioned prudential regulatory requirements.
(2) The qualification requirements on the shareholder and de facto controller whose equity holding in the securities company will be 5% or more after purchasing the shares:
(a) Its financial status, profitability and credibility fulfil the statutory requirements.
(b) It has a clear self-restraint mechanism and arrangement for systems.
Related Legislation: PRC Company Law (Amended) , Oct 27 2005, CLP 2005 No.10 p.21; PRC Securities Law (Amended) , Oct 27 2005, CLP 2006 No.1 p.31; and Regulations for the Oversight of Securities Companies, Apr 23 2008, CLP 2008 No.6 p.45
clp reference:3700/08.05.09(2)promulgated:2008-05-09This premium content is reserved for
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