Recently, the State Council has issued the Implementation Plan for Transferring Part of State Capital to Enrich Social Security Funds (the "Plan").
The Plan makes provisions for the transfer scope, capital to be transferred, proportion of the transfer and the party receiving the capital; procedures and steps of the transfer; transfer supporting measures, etc. The Plan states that, the central and local state-owned and state-holding large and medium-sized enterprises and financial institutions are included in the transfer scope, and that the transfer proportion is 10 percent of the state-owned shares. The social security funds and state-owned companies of provinces (autonomous regions and municipalities directly under the Central Government), as the receiving party, will act as the financial investor and will not interfere with the day-to-day production and operation of enterprises, and their profits mainly come from the equity dividends. The Plan stipulates that the current policy of raising social security funds by transferring or reducing state-owned shares will cease to be effective from the date of its issuance; if the enterprise transformation program of an enterprise covered in the transfer scope relates to state-owned share transfer, the program shall be integrated with the state capital transfer plan. The Plan also proposes to explore the establishment of a reasonable dividends mechanism for the transfer of state-owned shares.