. — Reuters
BEIJING: Chinese authorities have released revised rules on foreign investors’ strategic investments in listed companies in a move to encourage foreign investors to make long-term value investments in the country.
The revised rules, jointly released last Friday by six government departments, including the Commerce Ministry and the China Securities Regulatory Commission, allow foreign natural persons to make strategic investments in listed companies, a change from the old rules that only allowed foreign legal persons or organisations to make such investments.
Capital requirements have also been lowered under the new rules for foreign investors that do not become the controlling shareholders in listed firms.
The latest capital requirement for them will be no less than US$50mil in total actual assets or no less than US$300mil in total managed actual assets.
The new rules add tender offers as an extra option to make strategic investments.
In the past, the only available options were private placements and share transfer agreements.
Foreign investors intending to invest through the options of private placements or tender offers will be allowed to use shares of non-listed overseas companies as consideration shares for acquisition payment.
The new rules also eased requirements on the shareholding ratio and the lock-up period.
The shareholding-ratio requirement has been scrapped for foreign investors making investment through private placements, while the ratio requirements for the options of tender offers and share transfer agreements are lowered to 5% from the previous 10%.
In order to encourage medium and long-term investments, the requirement on lock-up periods for acquired shares should be no shorter than a 12-month period under the new rules.
This was reduced from no shorter than three years previously.
A press briefing posted on the Commerce Ministry’s website said that the revised measures seek to reduce the investment threshold for foreign investors, broaden the channels for foreign investment in the country’s securities market and encourage foreign investors to carry out long-term value investments.
The scale of China’s securities market has further expanded in recent years.
This is in line with the sustained and healthy development of China’s economy and the nation’s deepened reform and opening up.
Welcoming more high-quality foreign investment in listed companies will help promote China’s industrial upgrading as well as the healthy and stable development of China’s capital market.
The revised rules are in line with the reform measures adopted at the Third Plenary Session of the 20th Central Committee of the Communist Party of China held in July.
The measures vowed to open China’s commodity, services, capital and labour markets wider to the outside world in an orderly manner, and facilitate foreign equity investment and venture capital investment in China.
China issued rules for foreign investors to make strategic investments in listed companies back in 2005.
Since then, foreign investors have made strategic investments in more than 600 listed companies. — Xinhua
