The National Equities Exchange and Quotations Company Limited ("NEEQ") has recently issued the Circular on Regulating the Stock Repurchase Business of NEEQ-listed Companies (the "Circular").
The Circular sets forth the requirements for repurchase prices, scale of stock buyback, information disclosure and instructions for buyback deals. The Circular clarifies that a NEEQ-listed company shall reasonably determine a repurchase price and the size of stocks it will buy back, in accordance with actual situations and its abilities. As for the scale of stock buyback, it is stipulated that a NEEQ-listed company may determine how many stocks it will buy back either based on the total capital available for the repurchase or the total amount of stocks available for the purchase, in light of its own situations, and shall expressly specify in the repurchase plan the maximum amount of stocks to be repurchased. Each lead securities trader shall strictly control the entry to buyback deals and give prudent opinions on the compliance of a repurchase plan. Furthermore, the Circular clearly states that a NEEQ-listed company shall keep a tight rein on the scope of insiders with access to instructions for buyback deals, ensure confidentiality, and put a ban on any leak of relevant information, so as to prevent dominant parties from making use of their information superiority to "exclusively" grasp the opportunity for buyback. It is also stressed that supervision shall be tightened to crack down upon any unlawful repurchase of stocks from targeted parties.