Five departments including the Ministry of Finance ("MOF") have recently issued the Circular on Comprehensively Promoting the Transfer of a Portion of State-owned Capital to Replenish Social Insurance Fund (the "Circular").
The Circular states that work on transferring part of state-owned capital to replenish social insurance fund will kick off among the central government and all local governments. Among others, central enterprises where conditions permit shall basically complete this work by the end of 2019, but the deadline may be extended to the end of 2020 for those confronted with difficulties; enterprises established by central-level administrative or public institutions will commence the transfer after the centralized and unified supervision reform has been accomplished. Local government-backed enterprises should essentially complete the transfer by the end of 2020. Furthermore, the Circular expressly states that the state-owned shareholders shall work effectively on the transfer of equities of relevant enterprises, and urge enterprises to go through relevant formalities in a timely manner. Entities accepting the transferred equities shall ensure solid work on smooth acceptance of such equities, make sure the accepted equities will be held in a centralized manner and managed under separate accounting, and receive the assessment and supervision. The state-owned equities of local enterprises that are transferred will be all held, managed and operated by a wholly state-owned enterprise established by the people's government of each province, or a company capable of investing and operating state-owned capital will be entrusted to manage the equities in a separate account.