Download Circular of the State Council Concerning Further Strengthening the

Circular of the State Council Concerning Further
Strengthening the Administration of Share Issuance and
Listing Overseas
GuoFa [1997] No.21
June 20, 1997
The State Council and the competent department for securities under the State
Council have expressly instituted policies concerning share issuance and
listing overseas by a series of regulations and official documents since 1992.
However, for a period of time of late, there are some institutions and
enterprises which have, in violation of provisions, transferred domestic assets
in various forms overseas for listing shares without approval, resulting in
harmful effects. Issuing and listing shares overseas is a policy-intensive work
which must be carried out step by step in an organized way and in accordance
with the relevant state provisions. In view of the current problems in share
listing overseas and for the purpose of further strengthening the administration
to ensure order in share issuance and listing overseas, the relevant questions
are hereby notified as follows:
1.Any overseas listed company registered in a foreign country and held by a
Chinese shareholder(s) (including in the case where a Chinese shareholder is
the largest one, the same below) (hereinafter referred to as "an overseas
Chinese-holding listed company") shall subject itself to the supervision and
regulation of the local securities supervisory and regulatory organ when
engaging in activities such as capital-dividing for listing shares and increase in
issuance of shares. However, the share-holding unit(s) inside the country of
the Chinese shareholder(s) should report the case to the China Security
Supervisory and Regulatory Commission for the record afterwards and shall
strengthen the supervision and administration over the share ownership.
2.Local laws are applicable where a Chinese invested non-listed company or a
Chinese-holding listed company which has entered into registration overseas
applies overseas for issuing and listing shares with its overseas assets or its
domestic assets which are formed from its overseas assets invested in China
and have been in its actual possession for over three years. However, the
share-holding unit(s) inside the country should obtain consent in advance from
the provincial people's government or the competent department under the
State Council based on its subordination thereto. For domestic assets in its
possession for not more than three years, the company shall not apply for
share issuance and listing overseas. In the case of special requirements, a
report thereon shall be submitted to the China Securities Supervisory and
Regulatory Commission for verification and then subject to the examination
and approval of the State Council Securities Commission. After the listing has
been completed, the share-holding unit(s) inside the country should report the
relevant details to the China Securities Supervisory and Regulatory
Commission for the record.
3.Where assets of an internal enterprise are to be transferred to an overseas
Chinese invested non-listed company or an overseas Chinese-holding listed
company by purchase, exchange of shares, allocation or by any other means
for listing shares overseas, or where domestic assets are to be first transferred
to an overseas Chinese invested non-listed company and then injected into an
overseas Chinese-holding listed company for listing shares overseas, the
internal enterprise or the share-holding unit(s) inside the country of the
Chinese shareholder(s) should obtain in advance consent from the provincial
people's government or the competent department under the State Council
based on its subordination thereto, then report to the China Securities
Supervisory and Regulatory Commission for verification, and thereafter
subject it to the examination and approval of the State Council Securities
Commission in accordance with the state industrial policies, the relevant
provisions of the State Council and the total volume for the year.
4.In reiteration of the spirit contained in the provisions of the Circular of the
State Council Concerning Suspending the Purchase of Overseas Enterprises
and Further Strengthening the Administration of Overseas Investment (GuoFa
[1993] No.69), internal institutions and enterprises are prohibited from listing
their shares through shell firms by purchasing share-holding rights of overseas
listed companies.
5.Violations of the aforesaid provisions shall be treated and punished as
issuing of shares without authorization. Persons in charge of the competent
departments held responsible for such violations shall be given administrative
sanctions by the department concerned. Persons in charge of a violating unit
and other persons directly responsible shall be removed from their posts or
even expelled therefrom by the department at the next higher level than the
unit. Those who commit crimes shall be transferred to the judicial organs and
investigated for criminal responsibility according to law. Violating units,
intermediary agencies involved and violators shall be penalized by the China
Securities Regulatory Commission in accordance with the provisions of the
Interim Regulations on the Administration of Share Issuance and Trading and
other relevant provisions.
All localities and departments shall, in strict accordance with the provisions of
this Circular, take practical and effective measures to exercise supervision on
its subordinate enterprises for the earnest implementation of the relevant state
laws and policies. Internal enterprises should take direct listing of shares as
the main form in which they seek funds on the overseas securities market. The
State Council Securities Commission shall continue to direct this work well and
select state-owned enterprises which conform to the state industrial policies
and overseas listing requirements to list shares directly overseas.
This Circular shall enter into force as of the date of Promulgation.