The China Securities Depository and Clearing Corporation Limited ("CSDC") has recently released the Guide to the Pilot Program for Full Circulation of H-shares (for Trial Implementation) (the "Guide"), immediately effective from the issue date.
The Guide provides that for an overseas-listed company that obtains an approval from the China Securities Regulatory Commission ("CSRC") to join in the pilot program for the full circulation of H-shares, the shares not listed on the overseas stock exchange, involved in the pilot program for full circulation of H-shares and originally registered with the Beijing Branch of the CSDC will be registered across borders in Hong Kong and then turned into overseas-listed shares tradeable in the Hong Kong market. The Guide expressly states that to join in the pilot program for full circulation of H-shares, a domestic securities company must apply to the Shenzhen Branch of the CSDC for opening a reserve account and a margin account for the full circulation of H-shares, and during the pilot period, it shall use the settlement reserve account and the settlement margin account opened for B-shares traded on the Shenzhen Stock Exchange ("SZSE") as the corresponding accounts for the pilot program for the full circulation of H-shares. To participate in the pilot program, a securities broker handling the commissioned issuance overseas shall use the existing reserve account and the margin account, opened for switching B-shares into H-shares, as the corresponding accounts. Moreover, the Guide notes that, the account exclusively for the full circulation of H-shares, using one of account numbers available to B-shares traded on the SZSE, is merely used for the sale of fully-circulated H-shares but not for any other purposes.