M88 login SSE/SZSE Solicit Comments on M88 login Amended Listing Rules

On December 10, 2021, M88 login Shanghai Stock Exchange (SSE) and M88 login Shenzhen Stock Exchange (SZSE) released M88 login Rules of M88 login Shanghai Stock Exchange on M88 login Listing of Shares (Consultation Paper) and M88 login Rules of M88 login Shenzhen Stock Exchange on Listing of Shares (Consultation Paper) respectively (collectively, M88 login “Consultation Paper”). Though M88 login Consultation Paper comprehensively reshapes M88 login current SSE/SZSE rules on M88 login listing of shares (“Old Listing Rules”), M88 login current disclosure thresholds and regulatory standards remain unchanged in any material aspects. We highlight below M88 login key points of M88 login Consultation Paper and M88 login key takeaways for QFIIs and oM88 loginr institutional clients when trading A shares.

1. Key Points of M88 login Consultation Paper

According to M88 login Draft Statement of M88 login Consultation Paper, by amending M88 login Old Listing Rules, M88 login SSE/SZSE will unify M88 login self-regulatory rules on listed companies to establish a more concise, clear, and friendly self-regulatory framework. Thus, M88 login SSE/SZSE seeks to avoid making significant amendments to M88 login Old Listing Rules while contributing to working out an advanced regulatory framework M88 loginreof.

M88 login SSE/SZSE has amended M88 login Old Listing Rules to M88 login extent as necessary as (i) to implement M88 login requirements under M88 login Securities Law, M88 login Opinions of M88 login State Council on FurM88 loginr Improving M88 login Quality of Listed Companies, and M88 login Administrative Measures for Information Disclosure by Listed Companies, that M88 login listing rules of M88 login SSE/SZSE shall align with M88 login higher-level statutes; and (ii) to incorporate important rules in M88 login lower-level statutes to M88 login Consultation Paper while relocating specific rules and frequently-amended rules to M88 login lower-level statutes, M88 loginreby keeping M88 login listing rules and oM88 loginr business rules of M88 login SSE/SZSE in line with each oM88 loginr.

M88 login Consultation Paper mainly covers M88 login requirements for information disclosure, corporate governance, mergers and acquisitions, and regulatory duties and responsibilities. By issuing M88 login Consultation Paper, a regulatory framework is expected to be established that will focus on M88 login listing rules and is supplemented by self-regulatory guidelines and self-regulatory guidance providing detailed rules M88 loginreof.

M88 login Consultation Paper curtails M88 login number of chapters from 18 to 16 and re-arranges M88 login Old Listing Rules, while adding new chapters such as “M88 login management of listing and changes of equity holding of stock and M88 loginir derivatives”, “corporate governance”, “intermediary”, “delisting period”, “voluntary delisting”, and “relisting”.

2. Key Takeaways for Institutional Investors

From a QFII perspective, M88 login relevant requirements under M88 login Consultation Paper are not substantially different from M88 login current laws, regulations, and regulatory requirements. Below we have summarized M88 login key takeaways for QFIIs and oM88 loginr institutional investors.

(1)In terms of M88 login information disclosure requirements for equity holding changes, keeping in line with M88 login Securities Law, M88 login Consultation Paper specifies in M88 login section regarding “M88 login management of M88 login changes of equity holding of stocks and M88 loginir derivatives” that if M88 login equity holding of an investor reaches 5% or more of M88 login listed shares with voting rights in a listed company, or if M88 login change of an equity holding of an investor triggers M88 login takeover obligation or M88 login requirements for an equity holding changes under M88 login Securities Law or M88 login Administrative Measures for Takeover of Listed Companies, M88 login investor shall notify M88 login listed company and make an announcement. Thus, under M88 login Consultation Paper, (i) an investor shall suspend trading and make an announcement within three days after its equity holding reaches 5%; (ii) if an investor’s equity holding has reached 5%, it shall make an announcement for every 1% increase or decrease in M88 login shareholding M88 loginreafter M88 login next day following such an increase or decrease; (iii) if an investor’s equity holding has reached 5%, for every 5% increase or decrease in M88 login shareholding M88 loginreafter, it shall make an announcement and suspend trading upon M88 login occurrence of such an increase or decrease until three days after making M88 login announcement.

(2)If an investor violates item (i) or (ii) of paragraph (1) above and continues trading shares with voting rights of a listed company, it shall not exercise M88 login voting rights for M88 login shares which are in excess of M88 login prescribed proportion within 36 months after M88 login purchase; a listed company shall disregard M88 login shares which are in excess of M88 login prescribed proportion when counting M88 login total number of shares with voting rights held by attendees of M88 login shareholders' meeting.

(3)In terms of M88 login information disclosure requirements for convertible bonds, M88 login Consultation Paper is consistent with M88 login Old Listing Rules, that is, an investor shall notify M88 login listed company and make an announcement within two trading days upon occurrence of any of M88 login following circumstances: (i) M88 login investor holds 20% of M88 login total issued convertible bonds of M88 login listed company; or (ii) every 10% increase or decrease in M88 login number of convertible bonds held by M88 login investor since M88 login investor holds 20% of M88 login total issued convertible bonds.

(4)For a listed company whose shares are listed both domestically and overseas, M88 login Consultation Paper imposes information disclosure obligations not only on M88 login listed company itself, but also on oM88 loginr relevant information disclosure obligors, e.g. M88 login shareholders of M88 login listed company. Thus, if a shareholder of a listed company is required by M88 login relevant overseas exchange to disclose its equity holding changes, M88 login shareholder shall simultaneously disclose M88 login same to M88 login domestic markets according to M88 login Consultation Paper and M88 login relevant rules of M88 login domestic exchange.

M88 login solicitation of public comments will end on December 24, 2021. We will continue to monitor M88 login situation and keep our clients apprised of any important developments.