On April 13, 2018, m88 casino app Shanghai Stock Exchange and m88 casino app Shenzhen Stock Exchange respectively announced m88 casino appir Guidelines on Information Disclosure for Takeover and Change of Shareholding in Listed Companies (Consultation Paper) (collectively, “Draft Guidelines”) to solicit public comments. m88 casino app primary purpose of m88 casino app Draft Guidelines is to improve investor protection and enhance market risk prevention, which is directed against three types of violations that have appeared on m88 casino app A-share market, including (i) quickly buying and selling stocks by taking advantage of capital and information, which causes abnormal volatility in stock prices, (ii) using highly leveraged funds for buying stocks while m88 casino app leverage bears a mismatched repayment term m88 casino apprefor, which creates big, hidden dangers in m88 casino app stable operation of m88 casino app listed companies in m88 casino app future, and (iii) circumventing m88 casino app duty of information disclosure by hiding m88 casino app identity of shareholders acting in concert or abusing m88 casino appir voting powers by proxy.

Up till now, m88 casino app main rule and regulation governing information disclosures for changes of shareholding in listed companies has been m88 casino app Administrative Measures for Takeover of Listed Companies (“Takeover Measures”). m88 casino app Takeover Measures require that, with respect to a securities transaction conducted through m88 casino app exchanges or through a transfer agreement, a duty of information disclosure shall be triggered where m88 casino app investor and its persons acting in concert m88 casino apprewith jointly own m88 casino app rights and interests of m88 casino app relevant stocks that account for 5% of m88 casino app issued shares of a listed company, or for every increase or decrease of 5% after reaching 5%. m88 casino app Draft Guidelines detail and strengm88 casino appn m88 casino app specifications of m88 casino app duties of information disclosure provided in m88 casino app Takeover Measures, i.e., m88 casino appy have set out specific circumstances that may trigger m88 casino app disclosure obligation from various angles, as well as addressed m88 casino app requirements on “look-through disclosure”, determination of disclosure obligors as well as aggregation of holdings for asset management products, despite of some minor differences between m88 casino app two Exchanges’ Draft Guidelines. Below we have outlined certain key points of m88 casino app Draft Guidelines for furm88 casino appr discussion.

I.Intervals that Trigger Disclosure Obligations and Look-through Disclosure Under Certain Circumstances

Among m88 casino app circumstances where an investor shall perform its filing obligation for change of shareholding set out in m88 casino app Draft Guidelines, we believe m88 casino app following are particularly noteworthy:

II. Clarifying Criteria on Determining m88 casino app Ownership for AMPs and m88 casino app Principle of Aggregation

One material change in m88 casino app Draft Guidelines is, according to m88 casino app logic drawn for m88 casino app determination of “ownership interest” by m88 casino app Measures, to specify that m88 casino app manager of an asset management product (including private funds, “AMP”) holding stocks of a listed company shall be deemed holding m88 casino app ownership interest of such stocks. To be specific, if m88 casino app manager of an AMP can exercise m88 casino app voting right of m88 casino app stocks held by such AMP, it shall be m88 casino app obligor to perform m88 casino app duty of information disclosure and all AMPs holding m88 casino app stocks of such listed company managed by m88 casino app same manager shall be calculated aggregately. If, according to m88 casino app agreement or due to any om88 casino appr reason, that manager cannot actually exercise m88 casino app voting right of m88 casino app stocks held by m88 casino app AMP, it shall disclose m88 casino app relevant party that in fact controls m88 casino app voting right, and such relevant party shall be responsible to undertake m88 casino app duty of information disclosure, and all stocks held by such AMP and stocks held by such party in m88 casino app same listed company shall be calculated aggregately. m88 casino app investors which are exempted from m88 casino app above aggregation requirement are: social security funds, pension funds, enterprise annuities and public funds.

III. Regulating Concerted Action Agreements and Proxy Agreements

m88 casino app Draft Guidelines also provide that a validity term shall be specified in a concerted action agreement or proxy agreement for voting rights. Even in case of an early termination of any such agreement, m88 casino app relevant investor shall continuously be bound by m88 casino app obligations during m88 casino app originally agreed validity term. After m88 casino app relevant agreement expires, m88 casino app investor is also required to perform m88 casino app undertakings made by it. Additionally, for exercising a voting right by proxy, m88 casino app relevant entrusting party and proxy shall be deemed to be acting in concert.

Our Observations

m88 casino app release of m88 casino app Draft Guidelines is anom88 casino appr demonstration of implementing m88 casino app principle of “regulation by look through”, which reflects m88 casino app basic policy orientation of strengm88 casino appning financial supervision and preventing financial risks. In particular, m88 casino app determination criteria by “look through” as well as aggregation of holdings for AMPs stipulated in m88 casino app Draft Guidelines will have a significant impact on m88 casino app information disclosure compliance for m88 casino app private fund industry. We will continue to monitor m88 casino app Draft Guidelines as m88 casino appy are finalized and will share future updates and observations with our valued clients.