China Securities Regulatory Commission, Regulatory Guidelines for Listed Companies No.2 — Regulatory Requirements in Respect of Management and Use of Proceeds Raised by Listed Companies

中国证券监督管理委员会上市公司监管指引第2号——上市公司募集资金管理和使用的监管要求

February 07, 2013 | BY

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Idle proceeds allowed to be used to purchase investment products.

Clp Reference: 3700/12.12.19 Promulgated: 2012-12-19 Effective: 2012-12-19

Promulgated: December 19 2012
Effective: as of date of promulgation

Main contents: The proceeds raised by listed companies that are provisionally idle may be invested in products that:

(i) are at a high safety level and satisfy the capital guarantee requirements, and the product issuing entity is able to provide an undertaking of capital guarantee; and

(ii) has good liquidity, and may not affect the normal operation of the investment plan for the proceeds.

The products that the proceeds are invested in may not be pledged. The settlement account dedicated for an investment product (if applicable) may not contain funds other than the proceeds, nor may it be used for other purposes. Listed companies that open or cancel a settlement account dedicated for an investment product shall file a record with the stock exchange in a timely manner and make an announcement thereon (Article 7).

Alternatively, idle proceeds may be temporarily used as supplementary liquid funds. Such funds may only be used for the production and operations related to the company's main line of business, and may not be used through direct or indirect arrangements for the placement or purchase of new shares, or trading of shares, the derivatives thereof or convertible corporate bonds. The maximum term of a single batch of supplementary liquid funds may not exceed 12 months (Article 8).

The portion of net proceeds actually raised by the listed company that exceeds the amount of proceeds planned to be raised may be used for permanent supplementary liquid funds and the repayment of bank loans. The aggregate amount every 12 months may not exceed 30% of the total amount of excess proceeds (Article 9).

Repealed legislation: Circular on Further Regulating the Use of Proceeds of Listed Companies, Feb 28 2007, CLP 2007 No.3 p.9

clp reference:3700/12.12.19promulgated:2012-12-19effective:2012-12-19

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