Opinions on the Application of Articles 14 and 44 of the Administrative Measures for the Material Asset Reorganization of Listed Companies-Opinions on the Application of Securities and Futures Laws No.12

　　Announcement of the China Securities Regulatory Commission [2016] No.18

　　September 8, 2016

　　The Opinions on the Application of Articles 14 and 44 of the Administrative Measures for the Material Asset Reorganization of Listed Companies-Opinions on the Application of Securities and Futures Laws No.12 are hereby promulgated and shall come into force as of the date of promulgation.

　　Opinions on the Application of Articles 14 and 44 of the Administrative Measures for the Material Asset Reorganization of Listed Companies-Opinions on the Application of Securities and Futures Laws No.12

　　In order to correctly understand and apply the provisions of Articles 14 and 44 of the Administrative Measures for the Material Asset Reorganization of Listed Companies (Order of the China Securities Regulatory Commission No.127, the "Measures"), the China Securities Regulatory Commission has formulated the Opinions on the Application of Articles 14 and 44 of the Administrative Measures for the Material Asset Reorganization of Listed Companies-Opinions on the Application of Securities and Futures Laws No.12, which are hereby promulgated for your compliance and implementation.

　　I. Item 4, Paragraph 1 of Article 14 of the Measures provides that: "If the listed company purchases and sells the same or relevant assets within 12 months in a row, the corresponding amount shall be calculated separately on an accumulative basis. Asset trading activities for which the written report on the material asset reorganization has been prepared and disclosed in accordance with the provisions of these Measures do not need to be included in the accumulative calculation. Where the CSRC otherwise provides for the accumulative period and scope of material asset reorganization specified in Paragraph 1 of Article 13 hereof, those provisions shall prevail."
　　Considering the particularity of reorganization acts specified in Article 13 of the Measures, in order to prevent the evasion of supervision by breaking up the whole into parts and strictly implement the provision that the assets to be injected must meet the relevant conditions for initial public offering of shares, the opinions on the application of the relevant calculation principles as specified therein are hereby set out as follows:
　　1. Implementing the principle of initial accumulation, that is, where the total amount or net assets of, operating income or net profits from the assets purchased by a listed company from the acquirer or the affiliated party thereof within 60 months as of the date when the control is changed (including the time when the control over the listed company is changed), for the first time, accumulatively account(s) for 100% or more of the corresponding indicator of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control over the listed company, or the shares issued correspondingly, for the first time, accumulatively account for 100% or more of the shares of the listed company for one trading day before the resolution of the board of directors on the first purchase of assets by the listed company from the acquirer or the affiliated party thereof, the consolidated purchase constitutes one material asset reorganization and shall be reported for approval as required; where the assets are purchased in separate time within the above 60 months, the total amount and net assets of, and operating income and net profits from, the assets purchased each time shall be subject to the audited corresponding indicators for the previous accounting year on the date of first announcement of such purchase; and
　　2. Implementing the principle of expected consolidation, that is, when the listed company reports the plan for material asset reorganization based on the principle of initial accumulation, if there is horizontal competition, an abnormal related-party transaction or any other issue, the commitment plan worked out by the acquirer or the affiliated party thereof for settling such issue may also be calculated on a consolidated basis if the future injection of assets into the listed company is involved.

　　II. Paragraph 1 of Article 44 of the Measures provides that: "A listed company that purchases assets through the issuance of shares may, at the same time, raise part of the supporting funds, of which the pricing method shall be subject to the relevant existing provisions, unless such purchase falls under the trading circumstances set forth in Paragraph 1 of Article 13 hereof." The opinions on the application of supporting financing for the project of purchase of assets by issuing shares as specified therein are hereby set out as follows:
　　As for supporting funds that are raised while a listed company issues shares to purchase assets, if the proportion of the supporting funds does not exceed 100% of the transaction price of the assets to be purchased, such funds shall be examined and approved by the Examination and Approval Committee for Merger, Acquisition and Reorganization; if the proportion exceeds 100%, such funds shall be examined and approved by the Issuance Examination and Approval Committee. The refinancing of a listed company that raises supporting funds for the project of purchase of assets not by issuing shares shall continue to be handled in accordance with the existing provisions.

　　III. These Opinions shall come into force as of the date of promulgation. The Opinions on the Application of Articles 14 and 44 of the Administrative Measures for the Material Asset Reorganization of Listed Companies-Opinions on the Application of Securities and Futures Laws No.12 (Announcement of the China Securities Regulatory Commission [2015] No.10) shall be repealed simultaneously.