Measures for Strategic Investment by Foreign Investors upon Listed Companies

measures for strategic investment by foreign investors upon listed companies

wednesday,april 30,2008 posted: 10:44 bjt(0244 gmt) fdi


no. 28

measures for strategic investment by foreign investors upon listed companies formulated by the ministry of commerce, china securities regulatory commission, state taxation administration, state administration of industry and commerce, the state administration of foreign exchange, are hereby promulgated and shall enter into force 30 days after its promulgation.

minister of the ministry of commerce
president of china securities regulatory commission
director general of the state administration of taxation
director general of the state administration for industry and commerce
director general of the state administration of foreign exchange
december 30, 2005


measures for strategic investment by foreign investors upon listed companies


article 1in order to standardize strategic investment of foreign investors on a-shares company (hereinafter referred to as listed company) after the reform of non-tradable shares of listed company, to maintain securities market order, to introduce foreign advanced management experience, technology and capital, to ameliorate structural governance of listed company, to protect the lawful rights of listed companies and the shareholders, the measures are hereby enacted in accordance with the requirement of directive opinions of china securities regulatory commission, the state-owned assets supervision and administration, the related laws and acts on supervision of foreign investment and listed company as well as the interim provisions on foreign investors’ acquisition and merger of domestic enterprises.
article 2the measures apply to such acts as foreign investors(hereinafter referred to as investors) acquired a-shares of the listed company having finished reform of non-tradable shares and of the new listed companies by means of long-and-mid-term strategic investment of merger and acquisition(hereinafter referred to as strategic investment) with certain scale.
article 3investors may undertake strategic investment in accordance with the measures after the approval of the ministry of commerce.
article 4strategic investment shall abide by the following principles:
(1)abide by the related national laws, rules and related industrial policy, without harming national economic safety and social public interest;
(2)abide by the principle of openness, equity and fairness, maintain the lawful right of listed companies and other shareholders, be subject to the supervision of government and public and the jurisdiction of china"s judiciary and arbitration;
(3)encourage long-and-mid-term investment, maintain normal order of securities market, and prohibit speculation;
(4)not impede fair competition, prevent from over-concentrations of domestic related products, and from exclusion or limitation of competition.
article 5the following circumstances shall be met for investor to conduct strategic investment:
(1)to acquire a-shares of listed company by means of contract transfer, regular, issuing of new shares by listed company or otherwise prescribed by national laws and rules;
(2)investment may be conducted by stages, with the proportion of shares obtained after the initial investment no less than 10% of the shares issued by the company, except special provisions for special industry or the approval by related competent authorities;
(3)a-shares obtained by listed company shall not be transferred within three years;
(4)as for the industries with specific provisions on share proportion of foreign investors, shares held by the above-mentioned investors shall accord with the related provisions; as for the regions prohibited from foreign investment, investors shall not invest in the above-mentioned regions;
(5)investment related to state shareholder of listed companies shall accord with the related provisions on state asset management.
article 6investors shall conform to the following requirements:
(1)foreign legal person or other organizations set and operated lawfully, steady finance, sound credit and experienced management;
(2)the total amount of abroad real asset shall not be less than usd0.1 billion or the total amount of real asset under supervision no less than usd 0.5 billion; or the total amount possessed by its parent company no less than usd0.1 billion or the total amount of real asset under supervision no less than usd 0.5 billion;
(3)wholesome governance structure, sound inner control system, and standardized operation;
(4)without several penalty from abroad supervision organs within three years (including its parent company).
article 7strategic investment conducted through new shares introduction by listed companies shall be undertaken in accordance with the following procedures:
(1)resolution on new shares introduction by board of directors of the listed company to investors and on revision draft of articles of association;
(2)resolution on new shares introduction by corporate shareholder of the listed company to investors and on revision draft of articles of association;
(3)introduction contract signed by the listed company and investor(s);
(4)application documents submitted by the listed company to the ministry of commerce in accordance with article 12 of the measures, special provisions prevail when available;
(5)the listed company, after the receipt of the approval from the ministry of commerce on strategic investment by investors upon the listed company, shall submit the introduction application documents to china securities regulatory commission and subsequently obtain its approval;
(6)the listed company, after the completion of introduction, shall draw the approval certificate of foreign invested enterprises by the ministry of commerce and thereby register alteration in the administrative authorities of industry and commerce.
article 8strategic investment by means of contract transfer shall be handled in accordance with the following procedures:
(1)resolution of strategic investment by board of directors of the listed company via investors and by means of contract transfer;
(2)resolution of strategic investment by board of directors of the listed company via investors and by means of contract transfer;
(3)stock transfer contract signed by the transferor and the investor;
(4)related application documents submitted by the investor to the ministry of commerce in accordance with article 12 of the measures, special provisions prevail when available;
(5)the investor with shares in the listed company, after having received the above-mentioned approval, shall handle confirmation procedures of stock transfer in the concerned stock exchange, conduct registration transfer procedures in securities registration and clearing institutions and submit them to china securities regulatory commission for filling and record keeping;
(6)the listed company, after the completion of contract transfer, shall come to the ministry of commerce for approval certificate of foreign-invested enterprise and thereby conduct alteration registration in the administrative authorities of industry and commerce.
article 9the investor, with the intention to substantially control the listed company by means of contract transfer, after having received the approval in accordance with item (1) ,item(2), item (3) and item(4) in article 8, shall submit the acquisition statement and the related documents to china securities regulatory commission, and after the check and approval by china securities regulatory commission, conduct stock transfer confirmation procedures, transact registration transfer procedure in securities registration and clearing institutions. the listed company, after completion of the above-mentioned procedure
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