The China Securities Regulatory Commission promulgated on October 23, 2014 the Measures for the Administration of Material Assets Reorganization of Listed Companies, as amended, and Decision on Amending the Measures for the Administration of Acquisition of Listed Companies (hereinafter, the "New Measures"), which will go into effect on November 23, 2014.
The New Measures further reduce and streamline the administrative approval procedures for mergers and acquisitions and reorganization under the rationale of "relaxed regulation and enhanced supervision" and make accommodating arrangements in areas of enhanced information disclosure, strengthened interim and subsequent monitoring, supervision of intermediaries to ensure accountability and compliance and protection of investors' rights and interests.
The New Measures primarily include the following amendments:
- Canceling the review of major acquisitions, sale or asset replacement of listed companies which do not constitute back door listing.
- Cancelling prior review of tender offers and of the two circumstances in which tender offers are exempt.
- Improving market pricing mechanisms and adding provisions concerning pricing flexibility and price adjustment mechanisms for share pricing.
- Improving the definition of back door listing by specifically subjecting back door listing to the same review requirements for IPOs and prohibiting back door listing of companies listed in China's Growth Enterprise Market.
- Further enriching the merger and acquisition and reorganization tools by creating regulatory room for preferred shares, convertible bonds for specific subjects, and warrants for specific subjects issued by listed companies as payment methods for mergers, acquisitions or reorganization.
- Cancelling the threshold restrictions and mandatory profitability forecast compensation requirements regarding the purchase of assets through shares issued by non-affiliated third parties to respect market game.
- Improving the performance guarantee system for tender offers by reducing the cost of a tender offer and enhancing the responsibilities of financial advisors.
- Specifically stipulating review by separate tracks and enhancing interim and subsequent review to enhance the compliance and accountability of relevant organizations.