Legislation roundup: IPO reform, preference shares and financial support in the Free Trade Zone
December 06, 2013 | BY
clpstaff &clp articles &The CSRC has released Opinions reforming the IPO system. For the first time in China, preference shares are to be launched according to Guiding Opinions from the State Council. The PBOC has released Opinions over financial support in the Free Trade Zone
Capital markets
China Securities Regulatory Commission, Opinions on Further Promoting the Reform of the System for Offering of New Shares
The CSRC will review the contents of offer application documents and information disclosures for their legal compliance, but will not make any determination as to the profitability and investment value of issuers. If, during the six months after the listing of a company, the closing price for its shares is below the offer price for 20 consecutive trading days, or if the closing price is lower than the offer price at the end of the six month period after the listing, the lockup period for the company shares held by the issuer's controlling shareholder and by the issuer's directors and senior management personnel will automatically be extended for at least six months.
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Further reading
The issuer of preference shares can decide at its own discretion the fixed interest rate/floating interest rate, whether it is necessary to distribute profits, whether it is necessary to distribute the dividends in short in the subsequent financial year in the event that profits are insufficient to distribute and whether holders of preference shares have the right to participate in the distribution of surplus profits with holders of common shares. The issuer is also able to set the conditions for the conversion and redemption of preference shares.
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Further reading
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Free Trade Zone
People's Bank of China, Opinions on Financial Support for the Establishment of the China (Shanghai) Pilot Free Trade Zone
The offshore parents of companies in the free trade zone are allowed to issue renminbi denominated bonds on capital markets in China. Chinese-invested and foreign-invested enterprises, non-bank financial institutions and other economic organisations registered in the zone may seek financing in renminbi and foreign currencies abroad.
See the digest for more details.
Further reading
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