Legislation roundup: M&A review, preference shares and private placements for IPOs

M&A

State Council, Opinions on Further Optimising the Market Environment for Enterprise Mergers and Restructurings
国务院关于进一步优化企业兼并重组市场环境的意见

The prior review of a listed company's acquisition report is abolished, and after-the-event accountability is strengthened. The examination and approval of the material asset purchases, sales and exchanges of listed companies is abolished (unless a backdoor listing is constituted). Examination and approval is also lifted for certain circumstances where the obligation to make a takeover offer to a listed company is waived. Authority for the examination and approval of transfers of shares of listed companies held by local state-owned shareholders is delegated to local governments.

See the digest for more details.

Further reading
Measures for the Administration of the Takeover of Listed Companies (Revised in 2014)
Opinions on Duly Registering Company Mergers and Divisions so as to Support Enterprise Consolidation and Re-organisation


Capital markets

China Securities Regulatory Commission, Measures for the Administration of the Pilot Project for Preference Shares
中国证券监督管理委员会优先股试点管理办法

A listed company wishing to publicly offer preference shares shall satisfy any of the following circumstances:
(1) its common shares are a component of the SSE 50 Index;
(2) it wishes to use the public offering of preference shares as the means to pay for the takeover or the merger by absorption of another listed company; or
(3) if it wishes to buy back common shares with the objective of reducing its registered capital, it may make a public offering of preference shares as the means of payment, or, once implementation of the buyback plan is completed, it may publicly offer preference shares not exceeding the total amount of the buyback and capital reduction.

See the full translation.

Further reading
Guiding Opinions on the Launch of the Pilot Project for Preference Shares
PRC Company Law (Amended)
PRC Securities Law (Amended)

China Securities Regulatory Commission, Measures for the Administration of the Offering and Underwriting of Securities (Revised)
中国证券监督管理委员会证券发行与承销管理办法 (修订)

The revised Measures specify that at the time of an initial public offering of shares, an arrangement is to be made to set aside a certain percentage of the shares for a private placement with enterprise pension funds and insurance proceeds. If the valid purchase multiple of the online investors exceeds 150 times, the offline offer percentage after clawback may not exceed 10% of the number of shares publicly offered on the occasion in question.


Further reading
Measures for the Administration of the Offering and Underwriting of Securities (Revised), Oct 2010
Opinions on Further Promoting the Reform of the System for Offering of New Shares