Administrative Measures for the Material Assets Reorganization of Listed Companies (Revised in 2019)
Administrative Measures for the Material Assets Reorganization of Listed Companies (Revised in 2019)
Administrative Measures for the Material Assets Reorganization of Listed Companies (Revised in 2019)
Order of the China Securities Regulatory Commission No. 159
October 18, 2019
(Adopted at the 52nd Chairman's Executive Meeting of the China Securities Regulatory Commission on July 7, 2014; revised according to the Decision of the China Securities Regulatory Commission on Revising the Administrative Measures for the Material Asset Reorganization of Listed Companies on September 8, 2016; and revised again according to the Decision of the China Securities Regulatory Commission on Revising the Administrative Measures for the Material Asset Reorganization of Listed Companies on October 18, 2019)
Chapter I General Provisions
Article 1 The Administrative Measures for the Material Assets Reorganization of Listed Companies (hereinafter referred to as the "Measures") are formulated pursuant to the provisions of the Company Law, the Securities Law and other relevant laws and administrative regulations, with a view to regulating material assets reorganization of listed companies, protecting the lawful rights and interests of listed companies and investors, and promoting the constant improvement of the quality of listed companies, and maintaining the order of the securities market and the social public interests.
Article 2 The Measures apply to asset trading behaviors, other than the daily business activities, conducted by a listed company or companies held or controlled by it, such as the purchase and sale of assets, or asset trading by other means that reach a specified proportion, thereby causing significant changes to the primary business, assets, or income of the listed company (hereinafter referred to as the "material assets reorganization").
Purchase of assets by a listed company by means of issuing shares shall be in compliance with the provisions of the Measures.
If a listed company, according to the fund raising purposes disclosed in the securities issuance documents that are verified and approved by the China Securities Regulatory Commission (hereinafter referred to as the "CSRC"), uses the raised funds to purchase assets or make outbound investments, the Measures shall not apply.
Article 3 Any organization or individual shall not damage the lawful rights and interests of listed companies and their shareholders by way of material assets reorganization.
Article 4 Where a listed company carries out material assets reorganization, the parties concerned must disclose or provide information in a timely and fair manner, ensure the authenticity, accuracy, and completeness of the information disclosed or provided, and that the information disclosed or provided is free from any false record, misleading statement, or major omission.
Article 5 Directors, supervisors, and senior management personnel of a listed company shall, during the material assets reorganization, be faithful, diligent, and conscientious, maintain the safety of the company's assets, and protect the lawful rights and interests of the company and all the shareholders.
Article 6 Securities service institutions and personnel that provide services for material assets reorganization shall abide by the relevant provisions of laws, administrative regulations, and the CSRC, observe the business criteria and code of ethics generally accepted in the sector, strictly perform their duties, and bear liability for the authenticity, accuracy, and completeness of the documents prepared and issued by them.
For the purpose of the preceding article, the securities service institutions and personnel shall not instigate, assist or collude with the client to prepare or disclose the reports or announcements that have any false record, misleading statement, or major omission, and shall not engage in unfair competition or make use of the material assets reorganization of the listed company to seek improper interests.
Article 7 Any organization or individual shall be obliged to keep confidential the information on material assets reorganization they have access to before such information is disclosed in accordance with the law.
Any organization or individual is prohibited from conducting insider dealing, manipulating the securities market, or committing other illegal acts by using the information on material assets reorganization.
Article 8 The CSRC shall supervise and administer the material assets reorganization of listed companies in accordance with the law.
The CSRC shall review the applications for material assets reorganization or purchase of assets through issuance of shares of listed companies, and may make differentiated, open and transparent regulatory system arrangement to conditionally reduce the contents and processes of review according to the standard operation and credit standing of listed companies and the capability and quality of financial advisors to practice and based on the industrial policies of the State and the types of reorganization transactions.
Article 9 The merger and acquisition funds, equity investment funds, venture capital investment funds, industrial investment funds and other investment institutions established in accordance with the law are encouraged to participate in the merger, acquisition and reorganization of listed companies.
Article 10 The CSRC shall establish a Listed Companies' Merger, Acquisition and Reorganization Review Committee (hereinafter referred to as the "Merger, Acquisition, and Reorganization Committee") under the Public Offering Review Committee. The Merger, Acquisition, and Reorganization Committee shall vote on the application for material assets reorganization or purchase of assets through issuance of shares submitted thereto for deliberation, and present examination and verification opinions.
Chapter II Principles and Standards for Material Assets Reorganization
Article 11 For carrying out material assets reorganization, a listed company shall provide sufficient explanation and make disclosure on the compliance of the present transaction with the following requirements:
1. it shall meet the industrial policies of the State and the provisions of laws and administrative regulations on environmental protection, land administration, and anti-monopoly;
2. it will not result in inconformity of the listed company with the stock listing conditions;
3. the price of assets involved in the material assets reorganization is fair, and there is no circumstance in which the lawful rights and interests of the listed company and the shareholders will be undermined;
4. the ownership of the assets involved in the material assets reorganization is clear, and there is no legal obstacle in the change of owner or transfer of such assets, and the relevant creditor's rights and debts are legally handled;
5. it is conducive to strengthening the listed company's sustained operational capacity, and there is no circumstance which may lead to a result that the main assets of the listed company are cash, or the listed company has no specific operational business after the reorganization;
6. it is good for the listed company to maintain independence from its actual controller or affiliated parties in terms of business, assets, finance, personnel, organization, and other aspects, and comply with the relevant provisions of the CSRC on the independence of listed companies; and
7. it is good for the listed company to form or maintain a healthy and effective legal person governance structure.
Article 12 Purchase or sale of assets by a listed company or a company held or controlled by it shall constitute the material assets reorganization provided it meets any of the following standards:
1. the total amount of assets purchased or sold accounts for 50% or more of the total amount of end-of-period assets of the listed company in the consolidated financial and accounting report for the last accounting year that has been audited;
2. the operating income from the purchased or sold assets in the last accounting year accounts for 50% or more of the operating income in the consolidated financial and accounting report for the same period that has been audited; or
3. the net assets purchased or sold account for 50% or more of the end-of-period net assets in the consolidated financial and accounting report for the last accounting year that has been audited, and exceed CNY50 million.
If the purchase or sale of assets does not reach the standards specified in the preceding paragraph, but the CSRC discovers that there are major problems that may undermine the lawful rights and interests of the listed company or the investors, the CSRC may, according to the principle of prudent supervision and administration, order the listed company to disclose the relevant supplementary information, suspend the transactions, engage an independent financial advisor or any other securities service institution to make supplementary verification and disclose the professional opinions pursuant to the provisions of the Measures.
Article 13 Where the purchase of assets by a listed company from the acquirer or the affiliated party thereof within 36 months of the date when the control over the listing company is changed causes any of the following fundamental changes to the listed company, such purchase constitutes material asset reorganization, and shall be reported to the CSRC for approval in accordance with the Measures:
1. the total assets purchased account for 100% or more of the total amount of the end-of-period assets of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control over the listed company;
2. the operating income from the purchased assets in the last accounting year accounts for 100% or more of the operating income of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control over the listed company;
3. the net assets purchased account for 100% or more of the end-of-period net assets of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control over the listed company;
4. the shares issued for the purchase of assets account for 100% or more of the shares of the listed company on the trading day immediately before the resolution of the board of directors on the first purchase of assets by the listed company from the acquirer or the affiliated party thereof;
5. the purchase of assets by the listed company from the acquirer or the affiliated party thereof is not up to the standards set out in Items 1 to 4 of this paragraph, but may cause fundamental changes to the primary business of the listed company; or
6. other circumstances that may cause fundamental changes to the listed company as identified by the CSRC.
To carry out the foregoing material asset reorganization, a listed company shall conform to the following provisions:
1. meet the requirements prescribed in Articles 11 and 43 herein;
2. the operational entity from which the assets are purchased by the listed company shall be a joint stock company or a limited liability company and meet the other issue conditions prescribed in the Administrative Measures for Initial Public Offering and Listing of Shares;
3. none of the listed company and its controlling shareholders and actual controllers in the recent three years are involved in the circumstance where they are under investigation by a judicial organ due to a suspected criminal offense or by the CSRC due to the suspected violation of laws or regulations, except where it has been three full years since the termination of the suspected criminal offense or violation of laws or regulations, the transaction plan is able to eliminate the adverse consequence that is likely to be caused by such act and imposition of liability on the relevant persons committing the act is not affected;
4. none of the listed company and its controlling shareholder and actual controller have been publicly denounced by the stock exchange within the last 12 months or have committed any other major dishonest behavior; and
5. the material asset reorganization does not fall under other circumstances that may damage the investors' legitimate rights and interests, or go against the principles of openness, fairness and justice as identified by the CSRC.
Material asset reorganization carried out by listed companies by means of issuing shares to purchase assets shall be subject to the Securities Law and the relevant provisions of the CSRC.
Control referred to in Paragraph 1 of this article is identified in accordance with Article 84 of the Administrative Measures for the Takeover of Listed Companies. The directors and senior management personnel who can control financial and operating decisions of a listed company decentralizing its equities shall be deemed as having control over the listed company.
Where a listed company on the Growth Enterprise Market purchases any asset in the high-tech industry or strategic emerging industry in conformity with the state strategies from the acquirer or the affiliated party thereof as of the date when the control is changed, leading to the occurrence of any circumstance set out in Paragraph 1 of this article, the business entity corresponding to the purchased asset shall be a joint stock company or a limited liability company, and meet other issuance conditions specified under the Administrative Measures for Initial Public Offerings and Listing on the Growth Enterprise Market.
Where the assets purchased by listed companies from the acquirers or the affiliated parties thereof as of the date when the control is changed belong to the finance, venture capital investment or other specific industries, separate provisions shall be formulated by the CSRC.
Article 14 For the calculation of the proportions specified in Articles 12 and 13 herein, the following provisions shall be complied with:
1.
......
Order of the China Securities Regulatory Commission No. 159
October 18, 2019
(Adopted at the 52nd Chairman's Executive Meeting of the China Securities Regulatory Commission on July 7, 2014; revised according to the Decision of the China Securities Regulatory Commission on Revising the Administrative Measures for the Material Asset Reorganization of Listed Companies on September 8, 2016; and revised again according to the Decision of the China Securities Regulatory Commission on Revising the Administrative Measures for the Material Asset Reorganization of Listed Companies on October 18, 2019)
Chapter I General Provisions
Article 1 The Administrative Measures for the Material Assets Reorganization of Listed Companies (hereinafter referred to as the "Measures") are formulated pursuant to the provisions of the Company Law, the Securities Law and other relevant laws and administrative regulations, with a view to regulating material assets reorganization of listed companies, protecting the lawful rights and interests of listed companies and investors, and promoting the constant improvement of the quality of listed companies, and maintaining the order of the securities market and the social public interests.
Article 2 The Measures apply to asset trading behaviors, other than the daily business activities, conducted by a listed company or companies held or controlled by it, such as the purchase and sale of assets, or asset trading by other means that reach a specified proportion, thereby causing significant changes to the primary business, assets, or income of the listed company (hereinafter referred to as the "material assets reorganization").
Purchase of assets by a listed company by means of issuing shares shall be in compliance with the provisions of the Measures.
If a listed company, according to the fund raising purposes disclosed in the securities issuance documents that are verified and approved by the China Securities Regulatory Commission (hereinafter referred to as the "CSRC"), uses the raised funds to purchase assets or make outbound investments, the Measures shall not apply.
Article 3 Any organization or individual shall not damage the lawful rights and interests of listed companies and their shareholders by way of material assets reorganization.
Article 4 Where a listed company carries out material assets reorganization, the parties concerned must disclose or provide information in a timely and fair manner, ensure the authenticity, accuracy, and completeness of the information disclosed or provided, and that the information disclosed or provided is free from any false record, misleading statement, or major omission.
Article 5 Directors, supervisors, and senior management personnel of a listed company shall, during the material assets reorganization, be faithful, diligent, and conscientious, maintain the safety of the company's assets, and protect the lawful rights and interests of the company and all the shareholders.
Article 6 Securities service institutions and personnel that provide services for material assets reorganization shall abide by the relevant provisions of laws, administrative regulations, and the CSRC, observe the business criteria and code of ethics generally accepted in the sector, strictly perform their duties, and bear liability for the authenticity, accuracy, and completeness of the documents prepared and issued by them.
For the purpose of the preceding article, the securities service institutions and personnel shall not instigate, assist or collude with the client to prepare or disclose the reports or announcements that have any false record, misleading statement, or major omission, and shall not engage in unfair competition or make use of the material assets reorganization of the listed company to seek improper interests.
Article 7 Any organization or individual shall be obliged to keep confidential the information on material assets reorganization they have access to before such information is disclosed in accordance with the law.
Any organization or individual is prohibited from conducting insider dealing, manipulating the securities market, or committing other illegal acts by using the information on material assets reorganization.
Article 8 The CSRC shall supervise and administer the material assets reorganization of listed companies in accordance with the law.
The CSRC shall review the applications for material assets reorganization or purchase of assets through issuance of shares of listed companies, and may make differentiated, open and transparent regulatory system arrangement to conditionally reduce the contents and processes of review according to the standard operation and credit standing of listed companies and the capability and quality of financial advisors to practice and based on the industrial policies of the State and the types of reorganization transactions.
Article 9 The merger and acquisition funds, equity investment funds, venture capital investment funds, industrial investment funds and other investment institutions established in accordance with the law are encouraged to participate in the merger, acquisition and reorganization of listed companies.
Article 10 The CSRC shall establish a Listed Companies' Merger, Acquisition and Reorganization Review Committee (hereinafter referred to as the "Merger, Acquisition, and Reorganization Committee") under the Public Offering Review Committee. The Merger, Acquisition, and Reorganization Committee shall vote on the application for material assets reorganization or purchase of assets through issuance of shares submitted thereto for deliberation, and present examination and verification opinions.
Chapter II Principles and Standards for Material Assets Reorganization
Article 11 For carrying out material assets reorganization, a listed company shall provide sufficient explanation and make disclosure on the compliance of the present transaction with the following requirements:
1. it shall meet the industrial policies of the State and the provisions of laws and administrative regulations on environmental protection, land administration, and anti-monopoly;
2. it will not result in inconformity of the listed company with the stock listing conditions;
3. the price of assets involved in the material assets reorganization is fair, and there is no circumstance in which the lawful rights and interests of the listed company and the shareholders will be undermined;
4. the ownership of the assets involved in the material assets reorganization is clear, and there is no legal obstacle in the change of owner or transfer of such assets, and the relevant creditor's rights and debts are legally handled;
5. it is conducive to strengthening the listed company's sustained operational capacity, and there is no circumstance which may lead to a result that the main assets of the listed company are cash, or the listed company has no specific operational business after the reorganization;
6. it is good for the listed company to maintain independence from its actual controller or affiliated parties in terms of business, assets, finance, personnel, organization, and other aspects, and comply with the relevant provisions of the CSRC on the independence of listed companies; and
7. it is good for the listed company to form or maintain a healthy and effective legal person governance structure.
Article 12 Purchase or sale of assets by a listed company or a company held or controlled by it shall constitute the material assets reorganization provided it meets any of the following standards:
1. the total amount of assets purchased or sold accounts for 50% or more of the total amount of end-of-period assets of the listed company in the consolidated financial and accounting report for the last accounting year that has been audited;
2. the operating income from the purchased or sold assets in the last accounting year accounts for 50% or more of the operating income in the consolidated financial and accounting report for the same period that has been audited; or
3. the net assets purchased or sold account for 50% or more of the end-of-period net assets in the consolidated financial and accounting report for the last accounting year that has been audited, and exceed CNY50 million.
If the purchase or sale of assets does not reach the standards specified in the preceding paragraph, but the CSRC discovers that there are major problems that may undermine the lawful rights and interests of the listed company or the investors, the CSRC may, according to the principle of prudent supervision and administration, order the listed company to disclose the relevant supplementary information, suspend the transactions, engage an independent financial advisor or any other securities service institution to make supplementary verification and disclose the professional opinions pursuant to the provisions of the Measures.
Article 13 Where the purchase of assets by a listed company from the acquirer or the affiliated party thereof within 36 months of the date when the control over the listing company is changed causes any of the following fundamental changes to the listed company, such purchase constitutes material asset reorganization, and shall be reported to the CSRC for approval in accordance with the Measures:
1. the total assets purchased account for 100% or more of the total amount of the end-of-period assets of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control over the listed company;
2. the operating income from the purchased assets in the last accounting year accounts for 100% or more of the operating income of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control over the listed company;
3. the net assets purchased account for 100% or more of the end-of-period net assets of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control over the listed company;
4. the shares issued for the purchase of assets account for 100% or more of the shares of the listed company on the trading day immediately before the resolution of the board of directors on the first purchase of assets by the listed company from the acquirer or the affiliated party thereof;
5. the purchase of assets by the listed company from the acquirer or the affiliated party thereof is not up to the standards set out in Items 1 to 4 of this paragraph, but may cause fundamental changes to the primary business of the listed company; or
6. other circumstances that may cause fundamental changes to the listed company as identified by the CSRC.
To carry out the foregoing material asset reorganization, a listed company shall conform to the following provisions:
1. meet the requirements prescribed in Articles 11 and 43 herein;
2. the operational entity from which the assets are purchased by the listed company shall be a joint stock company or a limited liability company and meet the other issue conditions prescribed in the Administrative Measures for Initial Public Offering and Listing of Shares;
3. none of the listed company and its controlling shareholders and actual controllers in the recent three years are involved in the circumstance where they are under investigation by a judicial organ due to a suspected criminal offense or by the CSRC due to the suspected violation of laws or regulations, except where it has been three full years since the termination of the suspected criminal offense or violation of laws or regulations, the transaction plan is able to eliminate the adverse consequence that is likely to be caused by such act and imposition of liability on the relevant persons committing the act is not affected;
4. none of the listed company and its controlling shareholder and actual controller have been publicly denounced by the stock exchange within the last 12 months or have committed any other major dishonest behavior; and
5. the material asset reorganization does not fall under other circumstances that may damage the investors' legitimate rights and interests, or go against the principles of openness, fairness and justice as identified by the CSRC.
Material asset reorganization carried out by listed companies by means of issuing shares to purchase assets shall be subject to the Securities Law and the relevant provisions of the CSRC.
Control referred to in Paragraph 1 of this article is identified in accordance with Article 84 of the Administrative Measures for the Takeover of Listed Companies. The directors and senior management personnel who can control financial and operating decisions of a listed company decentralizing its equities shall be deemed as having control over the listed company.
Where a listed company on the Growth Enterprise Market purchases any asset in the high-tech industry or strategic emerging industry in conformity with the state strategies from the acquirer or the affiliated party thereof as of the date when the control is changed, leading to the occurrence of any circumstance set out in Paragraph 1 of this article, the business entity corresponding to the purchased asset shall be a joint stock company or a limited liability company, and meet other issuance conditions specified under the Administrative Measures for Initial Public Offerings and Listing on the Growth Enterprise Market.
Where the assets purchased by listed companies from the acquirers or the affiliated parties thereof as of the date when the control is changed belong to the finance, venture capital investment or other specific industries, separate provisions shall be formulated by the CSRC.
Article 14 For the calculation of the proportions specified in Articles 12 and 13 herein, the following provisions shall be complied with:
1.
......