Jointly issued by the SASAC and the CSRC on 30 June 2007 and effective since 1 July 2007
The Measures introduce a new regulatory framework for the disposal of shares held by State-owned shareholders. During the 2005 reform of the share capital structure of companies listing shares on the Shanghai and Shenzhen exchanges, State-owned shareholders were encouraged to “decrease to the greatest extent possible” their shareholding in listed companies. State-owned shareholders retained some shares after the reform. The Measures now encourage State-owned shareholders to dispose of more of their tradable shares through the securities trading system, by mutual agreement or by gratuitous transfer.
The Measures exempt State-owned shareholders transferring their shares in listed companies from the requirement to obtain prior SASAC approval in specific circumstances. For instance, SASAC approval is not required if the transfer of such shares will not cause a change of control in the listed company. In contrast with previous regulations pursuant to which the transfer price was based on the net asset value per share, the Measures allow the transfer price to be based on the market price of the shares.
When disposing of shares by mutual agreement, State-owned shareholders must report to the SASAC and inform the listed company of the intended transfer. Under the Measures, the transfer price must be benchmarked against the arithmetic average of the daily weighted average price of the shares during the 30 trading days preceding the day when the preliminary announcement of the transfer is published. The consideration for the shares transfer can be ether cash or securities.
State-owned Shareholder may transfer its shares in a listed company to the governmental department, government-sponsored institution, wholly state-owned enterprise or wholly state-owned company, as a gift without any consideration. Such transfers are subject to State-level SASAC approval.