Operational Guidelines for the Pilot Reform of the Share-trading Business of Listed Companies

 2018-08-23  1298


· Area of Law: Negotiable Instruments Securities

· Level of Authority: Local Regulatory Documents

· Date issued:05-08-2005

· Effective Date:05-08-2005

· Issuing Authority: Shanghai Municipality Guangdong Province

· Status: Effective

 

Operational Guidelines for the Pilot Reform of the Share-trading Business of Listed Companies
Article 1 In order to specify the operational guidelines for the pilot reform of the share-trading business of listed companies, these Guidelines are formulated pursuant to the Notice of the China Securities Regulatory Commission (hereinafter referred to as CSRC) on the Pilot Reform of the Share-trading of Listed Companies and the relevant operational guidelines as provided for by the Shanghai Stock Exchange, the Shenzhen Stock Exchange (hereinafter referred to jointly as “stock exchange”) and the China Securities Depository & Clearing Corporation Limited (hereinafter referred to as SD&C).
Article 2 The board of directors of a listed company shall report to the stock exchange and make an announcement immediately after it is determined as a pilot entity to carry out the share-trading reform, and apply for suspending the trading of stocks and derivative products thereof (hereinafter referred to as stocks).
The announcement shall specify such contents as the company's being determined as a pilot entity to carry out the pilot share-trading reform, the shareholders of non-tradable shares that propose the pilot share-trading reform, the amount and status of the company's shares held thereby, the influences of the pilot share-trading reform on the corporate governance, existing risks, and the recommending institution to be employed, etc..
Article 3 During the period when the share-trading reform scheme is formulated, the pilot listed company shall communicate with the stock exchange and the SD&C on the technical operational matters involved in the scheme.
Article 4 The board of directors of a pilot listed company shall, within two working days after the resolution on the share-trading reform scheme is made, make an announcement pursuant to the prescriptions in Paragraph 2, Article 2 of the Notice, and apply for resuming the trading of company's stocks on the next day.
Article 5 The independent directors shall deliver their opinions concerning the impact of the pilot share-trading reform on the corporate governance, the protection of interests of shareholders with tradable shares and other important matters.
The company shall employ lawyers to provide legal advice on the pilot share-trading reform.
Article 6 The instructions on the pilot share-trading reform shall include:
(1)information on the formation and each alteration of capital stock structure as of the establishment of the company;
(2)shareholding proportion of the holders of non-tradable shares and the association with each other;
(3) holders of non-tradable shares, actual controllers of the holders of non-tradable shares who hold 5% or more of the total shares of the company, information on the holding of tradable shares of the company on the day prior to the day when the board of directors announces its pilot reform, and the information on the purchasing and selling of tradable shares of the company within the previous six months;
(4)the share-trading reform scheme
(5)commitments made by the holders of non-tradable shares;
(6)information on the holding of the company's tradable shares by the recommending institution on the day prior to the day when the board of directors announces its pilot reform, and the information on the purchasing and selling of the company's tradable shares within the previous six months; and
(7)other matters that shall be explained.
Article 7 The recommendation opinions shall include:
(1)whether the pilot listed company has committed any illegal or irregular act within the recent three years, and whether it has been publicly criticized by the CSRC or condemned by the stock exchange within the recent twelve months;
(2)whether there is any property right dispute over the non-tradable shares of the listed company, and whether the said non-tradable shares are pledged or frozen, etc.;
(3)evaluation on the impact of the reform scheme's enforcement on the rights and interests of the holders of non-tradable shares;
(4)the impact of the enforcement of the reform scheme on the corporate governance;
(5)examination of the documents regarding the pilot share-trading reform;
(6)whether there are circumstances that may have an impact on the recommending institution's good performance of its duties;
(7)other matters as required to be explained by the recommending institution;
(8)the recommendation conclusion and reasons therefor; and
(9)the contact addresses and phone numbers of the recommending institution and recommending representatives.
Article 8 Beside the contents as required in the Stock Listing Rules as prescribed by the stock exchange, the notice on the temporary assembly of shareholders shall include: the voting platform like the trading system and other networks as provided by the assembly of shareholders; the network voting time of no less than five trading days (including the day when the assembly of shareholders is held) that the company leaves for the holders of non-tradable shares; the rights of the holders of tradable shares and the time, conditions and ways for them to claim for their rights; the ways for independent directors to collect ballots; the importance of the participation in voting by the holders of non-tradable shares; and the uninterrupted suspension of trading of the company's stocks from the day following the equity registration day, etc.
Prior to the temporary assembly of shareholders, the exigent notice on the temporary assembly of shareholders shall be announced for three times or more.
Article 9 A pilot listed company shall, pursuant to the prescriptions in Paragraph 2, Article 2 of the Notice, apply to the stock exchange for suspending the trading of stocks from the day following the equity registration day of the temporary assembly of shareholders to the announcement of the resolution of the temporary assembly of shareholders.
If the share-trading reform scheme is adopted, the company shall announce the resolution of the assembly of shareholders and the scheme for the enforcement of the pilot share-trading reform within two working days, and apply for resuming the trading of the company's stocks; however, where it is necessary to continue the suspension of trading for the enforcement of the pilot share-trading reform, the company may apply to the stock exchange for continuing the suspension.
In case the share-trading reform scheme is not adopted by the temporary assembly of shareholders, the company shall announce the resolution of the assembly of shareholders within two working days, and apply for resuming the trading of stocks of the company.
Article 10 After the share-trading reform scheme is voted and adopted by the temporary assembly of shareholders, the pilot listed company shall apply to the stock exchange for confirmation of compliance of the alteration of stock rights, and submit the following documents:
(1)resolution of the temporary assembly of shareholders;
(2)instructions on the pilot share-trading reform;
(3)approval document issued by the relevant department on the disposal of the relevant non-tradable shares;
(4)document issued by the holders of non-tradable shares on the consent of the share-trading reform scheme, and their shareholding certificates;
(5)recommendation opinions;
(6)legal advice; and
(7)other documents as required by the stock exchange.
Article 11 The stock exchange shall conduct a formal examination of the documents as submitted by the company, and make a decision as to whether confirm it.
Article 12 After obtaining the confirmation document issued by the stock exchange on the alteration of stock rights, the pilot listed company shall apply to the SD&C for handling the alteration registration of shares and the settlement of funds, etc., and submit the documents as mentioned in Article 10.
Article 13 The pilot listed company shall, within two working days after the completion of alteration registration of shares, publish a report on the stock structural alteration after the pilot share-trading reform and the timetable for the listing of shares.
Article 14 After the enforcement of the share-trading reform scheme, and when the prescribed selling period for the shares of prescribed selling period as held by the original holders of non-tradable shares expires, the listed company shall make an announcement about it.
Article 15 In case any alteration occurs to the total amount of shares held and controlled by shareholders during the period of enforcing the share-trading reform scheme and selling shares step by step as promised by shareholders, the obligation to disclose the relevant information shall be performed in strict accordance with the Securities Law, the Measures for the Administration of Takeovers of Listed Companies and the Measures for the Administration of Disclosing Information Concerning the Alteration of Equities held by Shareholders of Listed Companies, etc.
Article 16 On the first trading day following the equity registration day for the enforcement of the share-trading reform scheme, the stock exchange shall not calculate the reference price for the invalidation of the company's stocks, shall not set limits for appreciation and depreciation, and shall not incorporate them into the index calculation of that day. From the second trading day onward, the stocks of the company shall be incorporated into the index calculation by taking the preceding trading day as the base period.
Article 17 The pilot listed company shall, by referring to the relevant provisions as set down by the stock exchange and the SD&C, handle those matters that are not clearly specified in these Guidelines.
Article 18 The power to interpret these Guidelines shall remain with the stock exchange concerned and the SD&C.
Article 19 These Guidelines shall come into force as of the date of promulgation.
Shanghai Stock Exchange
Shenzhen Stock Exchange
China Securities Depository & Clearing Corporation Limited
May 8, 2005