Administrative Measures for Material Assets Reorganization of Listed Companies (Revised in 2011)
Administrative Measures for Material Assets Reorganization of Listed Companies (Revised in 2011)
Administrative Measures for Material Assets Reorganization of Listed Companies (Revised in 2011)
Order of the China Securities Regulatory Commission No. 73
August 1, 2011
(Adopted at the 224th President's Meeting of the China Securities Regulatory Commission on March 24, 2008, and revised in accordance with the Decision on Amending the Relevant Regulations on Material Assets Restructuring and Supporting Financing by Listed Companies issued by the China Securities Regulatory Commission on August 1, 2011)
Chapter I General Provisions
Article 1 These Measures have been formulated in accordance with laws and administrative regulations such as the Company Law of the People's Republic of China and the Securities Law of the People's Republic of China to regulate the material asset reorganization activities of listed companies, protect the legitimate rights and interests of listed companies and investors, continuously improve the quality of listed companies, maintain order in the securities market, and safeguard the public interest.
Article 2 These Measures apply to asset transaction activities (hereinafter referred to as "material asset reorganization") including asset purchases and sales or other forms of asset transactions conducted by listed companies and companies that control them or are controlled by them outside the scope of their daily business operations and that reach the prescribed percentages, thus bringing about a major change in the core business, assets and income of listed companies.
Listed companies that issue shares to purchase assets shall comply with the provisions of these Measures.
These Measures do not apply to activities involving asset purchases or overseas investments by listed companies made using funds raised in accordance with the fund raising purpose disclosed in a securities issuance document approved by the China Securities Regulatory Commission (hereinafter referred to as "the CSRC").
Article 3 No unit or individual shall use material asset reorganization to damage the lawful rights of listed companies and their shareholders.
Article 4 Where listed companies conduct material asset reorganization, all interested parties shall disclose or provide information in a timely and fair manner, guarantee the authenticity, accuracy and integrity of the information disclosed or provided, and ensure that there are no false descriptions, misleading statements or major omissions.
Article 5 During material asset reorganization, the directors, supervisors and senior managers of listed companies shall act honestly, credibly, diligently and dutifully in safeguarding the company's assets and protecting the legitimate rights and interests of the company and all the shareholders.
Article 6 Securities service organizations and personnel that provide services for material asset reorganization shall abide by laws, administrative regulations and relevant CSRC provisions, follow generally recognized business and ethical standards in the industry, strictly perform their duties, and refrain from pursuing illegitimate interests; they shall also assume responsibility for the authenticity, accuracy and integrity of the documents they produce and issue.
Article 7 All units and individuals have an obligation to maintain the confidentiality of information on material asset reorganization of which they become aware before its disclosure according to law.
All units and individuals are forbidden from using information on material asset reorganization to conduct unlawful activities such as insider dealing and securities market manipulation.
Article 8 The CSRC shall supervise listed company material asset reorganization according to law.
Article 9 The CSRC shall set up a Listed Company Merger, Acquisition and Reorganization Review Committee (hereinafter referred to as the "review committee") from the Issuance Examination Committee, and shall vote on material asset reorganization applications submitted by the review committee and provide review opinions.
Chapter II Principles and Standards for Material Asset Reorganization
Article 10 Any listed company intending to conduct a material asset reorganization shall meet the following requirements:
1. The reorganization complies with state industrial policies and laws and with administrative regulations relating to environmental protection, land management and monopoly control;
2. The reorganization will not cause the listed company to fail to meet stock listing requirements;
3. A fair price will be paid for the assets involved in the material asset reorganization and no circumstances exist that might damage the legitimate rights and interests of the listed company and its shareholders;
4. The ownership rights attached to assets involved in the material asset reorganization are clear, there are no legal obstacles to the transfer of title or ownership rights, and the relevant creditor's rights and debts are lawfully dealt with;
5. The reorganization is conducive to enhancing the listed company's ability to sustain its business operations and is unlikely to lead to a situation in which the key assets of the listed company after the reorganization are cash or the company has no specific business; 6. The reorganization will enable the listed company to maintain its independence from its actual controllers and their affiliates in respect of its business operations, assets, finances, personnel and organization, and to comply with relevant CSRC provisions regarding the independence of listed companies; and
7. The reorganization will help the listed company to establish or maintain a robust and effective corporate governance structure.
Article 11 Where a listed company or any company it controls or is controlled by conducts an asset purchase or sale that meets one of the following standards, it shall be deemed to constitute material asset reorganization:
1. The total value of the assets purchased or sold account for no less than 50% of the total assets recorded in the listed company's audited consolidated financial statements for the last fiscal year;
2. The business income generated by the assets purchased or sold in the last fiscal year accounts for no less than 50% of the listed company's business income recorded in its audited consolidated financial statements for the last fiscal year;
3. The net value of the assets purchased or sold accounts for no less than 50% of the net value of the year-end total assets recorded in the listed company's audited consolidated financial statements for the last fiscal year and exceeds RMB50 million.
If the assets purchased or sold do not reach the standards stipulated above, but the CSRC finds that there are major issues that might damage the legitimate rights and interests of the listed company or its investors, it may, according to the principle of prudent supervision, order the listed company to disclose additional relevant information, suspend the transaction, and submit application documents.
Article 12 Where, as of the date of change of control, the total assets purchased from the acquirer by the listed company accounts a percentage of not less than 100% of the total assets at the end of the audited consolidated financial and accounting statements of the accounting year prior to the change of control of the listed company, then the ongoing operation time of the operating entity which the assets purchased by the listed company correspond to shall be no less than three (3) years, and the net profit of the latest two accounting years thereof shall be positive and accumulate to an amount of more than RMB20, 000, 000, except complying with the provisions of Article 10 and Article 42 hereof. Where the assets purchased by listed companies fall into the scope of finance, venture capital or other particular industry, the China Securities Regulatory Commission shall otherwise provide.
After the completion of material assets restructuring as provided in the preceding paragraphs, listed companies shall comply with the relevant regulations of the China Securities Regulatory Commission on the governance and standardized operation of listed companies, be independent from controlling shareholder, actual controller and other enterprises they controlled in terms of business, assets, finance, personnel and organs, and have no competition with or unconscionable related-party transaction with the controlling shareholder, actual controller and other enterprises they controlled.
Article 13 The following provisions shall apply when calculating the percentage as provided in Article 11 and 12 hereof:
1. If the assets purchased are equity assets, the total value of the assets shall be the product of the total value of the assets of the investee enterprise and the equity percentage represented by the investment, or the transaction amount, whichever the higher; business income shall be the product of the business income of the investee enterprise and the equity percentage represented by the investment; the net asset value shall be the product of the total net assets of the investee enterprise and the equity percentage represented by the investment, or the transaction amount, whichever the higher; If the assets sold are equity assets, the total assets, business income and net assets are respectively the product of the total assets, business income and net assets of the investee enterprise and the equity percentage represented by the investment.
If an asset purchase causes the listed company to take a controlling equity stake in the investee enterprise, the total value of the assets shall be the total value of the assets of the investee enterprise or the transaction amount, whichever the higher; business income shall be the business income of the investee enterprise, and net assets shall be the net assets of the investee enterprise or the transaction amount, whichever the higher; if an asset sale causes the listed company to lose its controlling rights over the investee enterprise, the total assets, business income and net assets shall respectively be the total assets, business income and net assets of the investee enterprise.
2. If the assets purchased are non-equity assets, the total value of such assets shall be their book value or the transaction amount, whichever the higher, and the net value of the assets shall be the difference between the value of the relevant assets and the book value of liabilities, or the transaction amount, whichever the higher; If the assets sold are non-equity assets, the values of total assets and net assets, respectively, shall be the book value of the assets and the difference between the value of the relevant assets and the book value of liabilities; If the non-equity assets do not involve liabilities, the standard for net assets stipulated in Item 1 of the previous Article 11 shall not apply.
3.
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