Matters concerning Shareholding Reduction by the Principal Shareholders of Listed Companies through Block Trading

 2018-06-23  44



  • Area of Law Securities
  • Level of Authority Industry Regulations
  • Date issued02-14-2018
  • Effective Date02-14-2018
  • Status Effective
  • Issuing Authority Shanghai Stock Exchange



Notice of the Shanghai Stock Exchange on Further Clarifying Matters concerning Shareholding Reduction by the Principal Shareholders of Listed Companies through Block Trading
All member entities and other market participants:
To further clarify the regulatory requirements and business operations for principal shareholders' shareholding reduction through block trading as specified in the Detailed Implementation Rules of the Shanghai Stock Exchange for Shareholding Reduction by Shareholders, Directors, Supervisors and Senior Executives of Listed Companies (hereinafter referred to as the “Detailed Rules for Shareholding Reduction”), the Shanghai Stock Exchange (hereinafter referred to as the “SSE”) hereby notifies you of the relevant matters and requirements as follows:
I. The orders of block trading of specific shares and shares other than specific shares shall be placed through different channels. If a principal shareholder of a listed company reduces specific shares, it or he shall submit the data on the order of shareholding reduction through block trading via the “Interface for Placing the Orders of Reduction of Specific Shares through Block Trading” of the block trading system of the SSE; and if the principal shareholder reduces the shares other than specific shares, it or he shall submit the data on the order of shareholding reduction through block trading via the ordinary interface for placing orders of the block trading system of the SSE (hereinafter referred to as the “ordinary channel for block trading”).
II. Determination of the reduction of shares other than specific shares through block trading: Where a principal shareholder that holds both the shares purchased through auction and the shares acquired in the manners other than auction (hereinafter referred to as “controlled shares”) reduces shares through the ordinary channel for block trading, if shares are reduced within the scope of the prescribed percentages, it or he shall be deemed to give priority to reducing controlled shares; or, if shares are reduced beyond the scope of the prescribed percentages, it or he shall be deemed to give priority to reducing the shares purchased through auction.
III. Responsibilities of the relevant parties in a block trade of shares other than specific shares:
(1) Transferor
Where a principal shareholder sells shares through the ordinary channel for block trading, it or he shall, in compliance with the provisions of Article 5 of the Detailed Rules for Shareholding Reduction, explicitly notify the member it or he entrusts and the transferee in the block trading of the quantity, nature, type and price of the shares to be sold; and where the shares to be sold contain controlled shares, it or shall observe the provisions of the Detailed Rules for Shareholding Reduction on the quantity limits imposed on shareholding reduction by principal shareholders through block trading, among others.
(2) Transferee
Where an investor accepts the shares transferred by a principal shareholder through the ordinal channel for block trading, it or he shall, in compliance with the provisions of Article 5 of the Detailed Rules for Shareholding Reduction, explicitly notify the member it entrusts of the quantity, nature, type and price of the shares to be transferred; and where the shares to be transferred contain controlled shares, it or he shall undertake to comply with the provision that the transferee shall not transfer the shares it accepts within six months after accepting them and other provisions of the Detailed Rules for Shareholding Reduction.
(3) Member entrusted by the transferor
The member entrusted by the transferor shall urge the transferor to perform the obligation to notify it of the information on the shares to be sold, verify whether the shares to be sold contain controlled shares and comply with the relevant provisions of the Detailed Rules for Shareholding Reduction, and properly retain the transferor's explanatory materials on share information. Where the transferor fails to perform the obligation of notification or is suspected of violating the relevant provisions of the Detailed Rules for Shareholding Reduction, the member shall not accept its or his entrustment to place an execution order with the block trading system of the SSE.
(4) Member entrusted by the transferee
The member entrusted by the transferee shall urge the transferee to perform the obligation to notify it of the information on the shares to be transferred; and, if controlled shares are involved, the member shall also require the transferee to undertake in writing not to transfer the shares within six months after accepting them, and properly retain the transferee's explanatory materials on share information and written commitment. If the transferee fails to perform the obligation of notification or refuses to issue a commitment, the member shall not accept its or his entrustment to place an execution order with the block trading system of the SSE.
IV. Other matters: Principal shareholders' reduction of specific shares through block trading shall be governed by the Detailed Rules for Shareholding Reduction and other relevant provisions of the SSE. Where a relevant institution that rents a participant business unit conducts trading through the ordinary channel for block trading, it shall perform relevant obligations by reference to the provisions of this Notice.
V. This Notice shall come into force on the date of issuance.
Shanghai Stock Exchange
February 14, 2018