Stricter rules on acquisitions released

    On February 14, the CSRC released its Decision on Amending Articles 62 and 63 of the Measures for the Administration of the Takeover of Listed Companies (中国证券监督管理委员会关于修改〈上市公司收购管理办法〉第六十二条及第六十三条的决定). The amendments come into force on March 15 and “hope to reduce price volatility and enhance the fairness of trade,” said a CSRC official to the China Daily newspaper.

    The amendments order that shareholders (those that own 50% of a listed company's issued stocks) must disclose a 1% increase in their stakes during the acquisition process. If the increase exceeds 2%, shareholders must stop purchases for the rest of the day and the day after. Previously, the CSRC required disclosures of 5% or more.

    Partner Li Qiang at O'Melveny & Myers in Shanghai told China Law & Practice: “It does not change the acquisition process a single bit – the CSRC's intention is to protect small share holders and investors falling in line with their policy.” Li added that the CSRC has some momentum and they are starting with small steps, but ultimately it is the high-end investors that dominate China's capital markets.