· Document Number：No. 68 [2016] of the Shenzhen Stock Exchange

· Area of Law： Securities

· Level of Authority： Industry Regulations

· Date issued：02-19-2016

· Effective Date：02-19-2016

· Status： Effective

· Issuing Authority： Shenzhen Stock Exchange

Guidelines for Tender Offer by Listed Companies (2016 Revision)
Shenzhen Stock Exchange
Shenzhen Branch of China Securities Depository and Clearing Co., Ltd.
February 19, 2016
Annex:
Guidelines for Tender Offer by Listed Companies (2016 Revision)
Article 1 For purposes of regulating the tender offer of listed companies, maintaining the order of the securities market, and protecting investors' lawful rights and interests, these Guidelines are developed in accordance with the Securities Law of the People's Republic of China, the Measures for the Administration of the Takeover of Listed Companies (hereinafter referred to as the “Administrative Measures for Takeover”), the Measures for the Administration of Securities Registration and Clearing, and other laws and regulations, departmental rules, regulatory documents, as well as the Rules of the Shenzhen Stock Exchange for the Listing of Stocks, the Rules Governing the Listing of Shares on the Chinext of the Shenzhen Stock Exchange, and other business rules.
Article 2 These Guidelines shall apply to the purchase of shares of companies listed on the Shenzhen Stock Exchange (hereinafter referred to as the “SSE”) by tender offer.
Article 3 The SSE and the Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. (hereinafter referred to as the “Shenzhen Branch of CSDC”) shall check the completeness of materials submitted by the purchaser and the securities company authorized by it, among others, and shall not assume responsibility for the authenticity, accuracy, completeness or legality of its content.
Article 4 Where the purchaser purchases the shares of a listed company by a tender offer, it shall prepare a tender offer report according to the requirements of the Standards for the Contents and Formats of Information Disclosure by Companies Offering Securities to the Public No. 17 - Tender Offer Report (hereinafter referred to as the “Standards No. 17”), hire a financial consultant, notify the target company, and disclose the summary of the tender offer report and the professional opinion of the financial consultant.
The purchaser shall place a special reminder in the summary of the tender offer report on whether the takeover is conducted for the purpose of delisting the shares of the target company, whether it has put forward the specific measures for the purpose of maintaining the listing status of the listed company, whether it also needs to obtain the approval of the relevant department, and other circumstances.
Article 5 The purchaser shall, when disclosing the summary of the tender offer report, submit the following documents to the company management department of the SSE:
(1) Statement on the self-examination of the purchase and sale of shares of the target company by the purchaser and its directors, supervisors and senior executives (see Annex 1).
(2) Contracts, agreements and documents on other arrangements relating to the tender offer.
(3) Tender offer report.
(4) Other documents as required by the SSE.
Article 6 The purchaser shall, within two trading days after the disclosure of the summary of the tender offer report, apply to the Shenzhen Branch of CSDC for undergoing performance guarantee formalities by at least one of the following methods:
(1) Where the purchaser pays the takeover price in cash, it shall deposit not less than 20% of the total amount of the takeover price in the self-operating settlement reserves account opened by the securities company authorized by it at the Shenzhen Branch of CSDC as a performance bond (see www.chinaclear.cn-legal rules-business rules-clearing and delivery-Shenzhen market-statement of information on special deposit bank account for the settlement reserves of the Shenzhen Branch of CSDC for the specific bank account information), and fax the Application Form for the Performance Bond for Tender Offer (see Annex 2), the summary of the disclosed tender offer report and other materials to the settlement business department of the Shenzhen Branch of CSDC, and apply for transferring the funds from the settlement reserves account of the authorized securities company to the settlement account of funds for purchasing securities.
(2) Where the purchaser pays the takeover price by securities listed and traded on a stock exchange, it shall apply to the investor business department of the Shenzhen Branch of CSDC for the custody of all securities used for the payment or authorize a securities company to do so, except for the new shares issued by the listed company.
(3) Where the purchaser takes the letter of guarantee issued by a bank as performance guarantee, it shall submit the letter of guarantee, the summary of the edited tender offer report, the written statement of the financial consultant on the authenticity of the bank's letter of guarantee and other materials to the investor business department of the Shenzhen Branch of CSDC, and the amount of the letter of guarantee shall be all funds required for the tender offer.
(4) Where the purchaser takes the written commitment made by the financial consultant to assuming the joint and several liability as performance guarantee, it shall submit the written commitment, the original authorization agreement entered into by and between the purchaser and the financial consultant, the summary of the edited tender offer report, and other materials to the investor business department of the Shenzhen Branch of CSDC. The financial consultant shall make a statement in the written commitment: if the purchaser fails to pay the takeover price upon expiration of the term of tender offer, the financial consultant will make unconditional payment.
Article 7 When the purchaser applies for the custody of securities used for the payment or authorizes a securities company to do so, it shall submit the following materials to the investor business department of the Shenzhen Branch of CSDC:
(1) An Application Form for the Custody of Securities (see Annex 3).
(2) A securities payment plan in compliance with the technical requirements of the depository and clearing system of the Shenzhen Branch of CSDC.
(3) The originals and photocopies of the purchaser's valid identification documents (if the originals cannot be provided, the notarized photocopies shall be provided).
(4) If the purchaser authorizes a securities company to undergo the relevant formalities, the authorized securities company shall also submit the photocopy of the business license, the originals and photocopies of the legal representative certificate, the power of attorney of the legal representative, and valid identification documents of the handling person (the seal of the securities company shall be affixed to the aforesaid materials, and the seal of the legal person shall also be affixed to the power of attorney) and the purchaser's power of attorney (see Annex 4).
(5) Disclosed summary of the tender offer report.
(6) Other materials as required by the Shenzhen Branch of CSDC.
The Shenzhen Branch of CSDC shall, after examining the aforesaid materials, undergo the formalities for the custody of securities used for the payment, and issue the handling result to the applicant.
Article 8 Where the purchaser fails to announce the tender offer report within 60 days after disclosing the the summary of the tender offer report, the purchaser shall notify the target company on the next trading day after the expiration of the term, and publish an announcement. It shall publish an announcement once every 30 days thereafter until the tender offer report is announced.
Article 9 Where the purchaser intends to cancel the takeover plan after disclosing the summary of the tender offer report but before announcing the tender offer report, or fails to obtain the approval of the relevant department after disclosing the summary of the tender offer report, it shall, after making the decision on canceling the takeover plan or receiving the relevant disapproval notice, notify the target company in a timely manner, and announce the cancellation of the takeover plan and the reason for cancellation.
Article 10 Where the purchaser cancels the takeover plan or the purchaser's takeover is not approved by the relevant department, it may apply to the Shenzhen Branch of CSDC for returning its performance bond and/or removing the temporary custody of securities, the purchaser shall, after disclosing the relevant announcement, submit the Application Form for the Transfer of Performance Bond for Tender Offer (see Annex 5) and/or the written application for removing the temporary custody of securities to the settlement business department of the Shenzhen Branch of CSDC.
Article 11 The purchaser shall submit the tender offer report and the following documents to the company management department of the SSE within three to five trading days before the announcement of the tender offer report:
(1) The relevant performance guarantee documents issued by the Shenzhen Branch of CSDC.
(2) Approval documents of the competent department on the tender offer (if applicable).
(3) Archives on the insiders of insider information reported by the purchaser for recordation according to the requirements of the Guidelines for the Standard Operation of Companies Listed on the Main Board, the Guidelines for the Standard Operation of Companies Listed on the Small and Medium-Sized Enterprise Board, and the Guidelines for the Standard Operation of Companies Listed on the ChiNext.
(4) Other documents as required by the Standards No. 17.
Article 12 The purchaser shall, when announcing the tender offer report according to the requirements of the Administrative Measures for Takeover and the Standards No. 17, disclose the following content at the same time:
(1) Circumstances that may lead to the modification of tender offer conditions within the term of tender offer.
(2) Material change of facts disclosed in the summary of the tender offer report (if any).
(3) Other content to be disclosed as required by the SSE.
Article 13 The board of directors of the target company shall, within 20 days as of the purchaser's disclosure of the tender offer report, disclose the report of the board of directors of the target company and professional opinions of the independent financial consultant.
Article 14 The purchaser shall begin to accept the declaration for the preliminary acceptance of tender offer on the next trading day after the announcement of the tender offer report.
The takeover term agreed upon for tender offer shall not be less than 30 days and shall not exceed 60 days, unless a competitive tender offer appears.
Article 15 Within the term of tender offer, the purchaser shall at least publish a reminder announcement on the preliminary acceptance of tender offer for at least three times, including the type of shares to be purchased by tender offer, the quantity and proportion of the shares to be purchased, form of takeover, takeover price, term of takeover and other circumstances.
Article 16 Where the purchaser needs to modify the tender offer within the term of tender offer, it shall publish an announcement in a timely manner, indicate the specific modification matters, and notify the target company. The announcement shall cover:
(1) the tender offer plan and a brief introduction to the progress;
(2) specific circumstances of the modification of the tender offer and the reason;
(3) corresponding deliberation procedures that shall be performed (if applicable);
(4) professional opinions of the financial consultant on the regulatory compliance and rationality of the modification of the tender offer;
(5) professional opinions of the lawyer on the regulatory compliance and rationality of the modification of the tender offer; and
(6) other content as required by the SSE.
The purchaser shall not modify the tender offer within 15 days before the expiration of the term of tender offer. In the case of change of the amount of funds for takeover due to the modification of tender offer, the purchaser shall also undergo the relevant formalities once again according to the relevant provisions of Articles 6 and 7 of these Guidelines.
Article 17 Where the purchaser makes any major modification to the conditions of the tender offer within the term of tender offer, the board of directors of the target company shall, within three trading days, announce the supplemental opinions of the board of directors and the independent financial consultant on the modification of the conditions of the tender offer.
Article 18 Where any major change occurs to the basic facts disclosed in the tender offer report, the purchaser shall publish an announcement in a timely manner, and notify the target company.
Article 19 The purchaser that plans to make a competitive tender offer shall send a reminder announcement on tender offer no later than 15 days before the expiration of the term of the initial tender offer, perform the announcement obligations and undergo the relevant formalities in accordance with the Administrative Measures for Takeover and the provisions of these Guidelines.
Article 20 A shareholder that agrees to accept a tender offer (hereinafter referred to as the “shareholder that has preliminarily accepted the tender offer”) shall declare the preliminary acceptance of the tender offer or revoke the preliminarily accepted tender offer through the securities company taking into custody his or her shares.
A shareholder that has preliminarily accepted a tender offer may declare the preliminary acceptance of the tender offer before the expiration of the term of tender offer; a shareholder that has preliminarily accepted a tender offer may revoke the declared preliminarily accepted tender offer three trading days before the expiration of the term of tender offer, a shareholder that has preliminarily accepted a tender offer may revoke the preliminarily accepted tender offer declared on the current day within three trading days before the expiration of the term of tender offer, but shall not revoke the preliminarily accepted tender offer that has been taken into temporary custody of the Shenzhen Branch of CSDC.
The elements of declaration for the preliminary acceptance of a tender offer include: code of tender offer, securities code, securities account, declared amount, sequence number of the contract, and business categories, among others (declaration for the preliminary acceptance of a tender offer or the declaration for the revocation of a preliminarily accepted tender offer).
Article 21 Where the purchaser modifies a tender offer within the term of tender offer, the original declaration for the preliminary acceptance of the tender offer shall no longer be valid, and the Shenzhen Branch of CSDC shall automatically remove the temporary custody of corresponding shares. If the shareholder of the target company accepts the modified tender offer, the shareholder shall make a new declaration.
Article 22 Where a shareholder that has preliminarily accepted the initial tender offer intends to sell all or partial of preliminarily accepted shares to the competitive offeror in the case of a competitive tender offer, the shareholder shall revoke the preliminary acceptance of the original tender offer for corresponding shares before the preliminary acceptance of the competitive tender offer.
Article 23 A shareholder of a listed company shall not use all shares restricted from sale held by him or her for the declaration of a preliminarily accepted tender offer, unless that the tender offer is conducted for the purpose of delisting the shares of the target company or under any other circumstance recognized by the CSRC and the stock exchange.
Article 24 The Shenzhen Branch of CSDC shall inspect declaration data accepted on the current day after completing the settlement of trading and non-trading businesses on the current day. After inspection is passed, the valid number of preliminarily accepted tender offers or revoked preliminarily accepted tender offers shall be confirmed under the following principles, and confirmed preliminarily accepted shares shall be subject to temporary custody, and the temporary custody of shares whose holders have revoked the preliminary accepted tender offer shall be removed.
Where the number of shares whose holder has preliminarily accepted a tender offer is more than or equals to the number of unfrozen shares actually held by the shareholder, the valid number shall be the number of unfrozen shares actually held by the shareholder; and if the number of shares whose holder has preliminarily accepted the tender offer is less than the number of unfrozen shares actually held by the shareholder, the valid number shall be the number of shares declared by the shareholder.
Where the number of shares whose holder has revoked the preliminary acceptance of a tender offer is more than or equals to the number of valid preliminarily accepted shares, the valid number shall be the number of valid preliminarily accepted shares; and if the number of shares whose holder has revoked the preliminary acceptance of the tender offer is less than the number of valid preliminarily accepted shares, the valid number shall be the number of shares declared by the shareholder.
Multiple declarations made under the same tender offer code of a same securities account on one trading day shall be handled according to the sequence of declarations received.
Article 25 Within the temporary custody period, the part of shares shall no longer be transferred in any form except judicial compulsory transfer.
Where preliminarily accepted shares within the term of tender offer are subject to judicial freeze, the securities company shall revoke the declaration for the preliminary acceptance of corresponding shares through the trading system of the SSE before assisting in the freeze of shares.
Article 26 The Shenzhen Branch of CSDC will, after day-end processing on each trading day, send the handling result of data on the preliminary acceptance of tender offers to the securities company.
The purchaser shall, before the opening of market sessions on each trading day within the term of tender offer, announce on the website of the SSE the information on the preliminary acceptance of tender offers and withdrawal of preliminary accepted tender offers on the previous trading day (see Annex 6 for the content and format of the announcement).
Article 27 Where the purchaser has sparse shares due to the purchase of preliminarily accepted shares at the same proportion upon the expiration of the term of tender offer, it shall handle sparse shares according to the methods for handling sparse shares in the distribution of rights and interests of the Shenzhen Branch of CSDC.
Article 28 The purchaser may apply to the settlement business department of the Shenzhen Branch of CSDC for the inquiry of result of preliminary acceptance of tender offer on the first trading day after the expiration of the term of tender offer.
When the purchaser pays the price for tender offer in cash, the purchaser shall, within three trading days after the expiration of the term of tender offer, authorize a securities company to deposit the full amount of the price for tender offer including taxes and fees deducted by the performance bond to its settlement reserves account at the Shenzhen Branch of CSDC, submit the Application Form for the Transfer of Performance Bond in Tender Offer (see Annex 5) to the settlement business department of the Shenzhen Branch of CSDC, to apply for transferring the money from its settlement reserves account to the settlement account of funds for purchasing securities.
Where the purchaser pays takeover price by securities, it shall pay and deposit the relevant taxes and fees according to the requirements of the preceding paragraph.
Where the purchaser submits a bank's letter of guarantee or the financial consultant makes a written commitment as performance guarantee, the purchaser shall, within one trading day after the expiration of the term of tender offer, pay and deposit the funds for takeover including taxes and fees by reference to the requirements of paragraph 2 of this Article.
Article 29 The company management department and legal affairs department of the SSE shall complete the formalities for the confirmation of transfer of preliminarily accepted shares (see Annex 7) within two trading days after the expiration of the term of tender offer.
Article 30 After the takeover of consideration in full amount, the Shenzhen Branch of CSDC shall, according to the confirmation letter of the SSE on the transfer of preliminarily accepted shares, remove the temporary custody of shares exceeding the prescribed purchase ratio and the custody of to-be-paid securities (if any), and then handle the registration of transfer of preliminarily accepted shares.
The Shenzhen Branch of CSDC shall send the detailed data on purchase of securities by tender offer and fund clearing to the securities company on the tender offer clearing date.
The Shenzhen Branch of CSDC will, on the date of transfer of preliminarily accepted shares, handle the settlement of corresponding funds (the net amount of takeover price multiplying the number of account transfer and deducted by corresponding expenses). The shareholder that has preliminarily accepted the tender offer may receive the funds through the securities company taking into custody his or her shares.
Article 31 The purchaser shall, after completing share transfer formalities, disclose in a timely manner the report on the tender offer of the listed company and result announcement, including:
(1) Brief information on the tender offer, stating the objective of takeover, categories of shares purchased, number and ratio of shares purchased, purchase price, payment method and time limit for purchase, among others.
(2) Implementation of the tender offer, stating the performance by the purchaser, the board of directors of the target company and other related parties within the term of tender offer.
(3) Result of the tender offer, stating the number of preliminarily accepted shares, whether the conditions for effectiveness as agreed upon in the tender offer report have been triggered, the result of effect, and other circumstances.
(4) Other content required by the SSE.
Article 32 From the expiration of the term of tender offer to the announcement of result of tender offer of the listed company, the trading of stocks of the target company and their derivatives shall be suspended. The SSE shall, according to the distribution of equities of the target company after the takeover, the plan of the purchaser on maintaining the listing status and its implementation, decide on the resumption of trading of shares of the target company and their derivatives.
Article 33 Under any of the following circumstances, the purchaser shall submit the Application Form for the Transfer of Performance Bond for Tender Offer (see Annex 5) to the settlement business department of the Shenzhen Branch of CSDC to apply for the return of performance bond or authorize a securities company to do so.
(1) There is a balance of performance bond after the completion of transfer registration.
(2) There is no preliminarily accepted tender offer at the expiration of the term of tender offer.
(3) The SSE does not confirm the transfer of shares.
(4) Other circumstances as recognized by the SSE and the Shenzhen Branch of CSDC.
The Shenzhen Branch of CSDC shall, after the receipt of the application form, return the performance bond for tender offer to the settlement reserves account of the securities company authorized by the person making the tender offer, and the authorized securities company shall return the funds to the person making the tender offer.
Article 34 For the performance bond included in the temporary custody account in tender offer, the Shenzhen Branch of CSDC shall, on the interest settlement date, calculate its interest according to the current deposit reserve ratio of enterprises and actual number of days of custody prescribed by the PBC. The applicant shall, when submitting the application for the transfer of performance bond, indicate the principal and corresponding interest in the remarks of the Application Form for the Transfer of Performance Bond for Tender Offer (see Annex 5). After the interest settlement date of a quarter, the settlement business department of the Shenzhen Branch of CSDC will transfer the interest to the reserves account of the securities company authorized by the purchaser.
Article 35 The business department of a securities company may charge expenses from shareholders that have preliminarily accepted the tender offer by reference to the charging standards for the normal sale of shares.
Where the securities company conducts tender offer, it shall pay the securities settlement risk fund by reference to the standards for trading in A-shares of the Measures for the Administration of Securities Settlement Risk Funds.
Article 36 These Guidelines shall be subject to interpretation by the SSE and the Shenzhen Branch of CSDC.
Article 37 These Guidelines shall come into force on February 19, 2016. The Guidelines for Tender Offer by Listed Companies (No. 39 [2003], SSE) jointly issued on July 18, 2003 by the SSE and the Shenzhen Branch of CSDC and the Guidelines for Tender Offer by Listed Companies jointly issued on January 13, 2006 by the SSE and Shenzhen Branch of CSDC shall be repealed concurrently.
Annexes:
1. Form of Self-Inspection of the Purchaser and Its Directors, Supervisors and Senior Executives
2. Application Form for the Transfer of Performance Bond for Tender Offer
3. Application Form for the Custody of Securities
4. Power of Attorney
5. Application Form for the Transfer of Performance Bond for Tender Offer
6. Announcement on the Preliminarily Accepted Shares of Companies Listed on the Shenzhen Stock Exchange (including the Power of Attorney)
7. Confirmation Letter on the Transfer of Shares Purchased by Tender Offer of Companies Listed on the Shenzhen Stock Exchange