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In order to introduce advanced management experiences, technologies and funds from abroad, quicken up the step of economic restructuring, improve the corporate governance structure of the listed companies, enhance their international competitive power, protect the lawful rights and interests of the investors, and promote the healthy development of the securities market, we have been consented by the State Council to hereby give our notice as follows regarding the issue on the transfer of state-owned shares and corporate shares of listed companies to foreign investors: I. The transfer of state-owned shares or corporate shares of a listed company to a foreign investor shall comply with the following principles: (1) to abide by the laws and regulations of the state, protect the safety of state economy and the public good, prevent the loss of state-owned assets, and maintain social stability; (2) to meet the requirements of the strategic adjustment of the distribution of state-owned economy and industrial policies of the state, and promote optimized allocation of state-owned capital and fair competition; (3) to stick to the principles of openness, justness and fairness, and maintain the lawful rights and interests of the shareholders especially medium and small shareholders; and (4) to attract medium and long-term investments, prevent short-term sensation, and maintain the order of the securities market. II. Whoever intends to transfer state-owned shares or corporate shares of a listed company to a foreign investor shall meet the requirements described in the "Catalog for Guiding Foreign Investment in Industry". The state-owned shares or corporate shares in any industry in which foreign investments are prohibited shall not be transferred to foreign investors; if the shareholding or relative shareholding party must be a Chinese party, the Chinese party's status as a shareholding or relative shareholding party shall still be maintained after the transfer. III. A foreign investor to whom transferred the state-owned shares or corporate shares of a listed company are transferred shall have strong operational and management ability and fund strength as well as good financial conditions and credit standing, and have the ability of improving the governance structure of the listed company and promoting the continuing development of the listed company. Whoever intends to transfer the state-owned shares or corporate shares of a listed company to a foreign investor shall adopt the method of open competition by different prices in principle. IV. In case the transfer of state-owned shares or corporate shares of a listed company to a foreign investor involves industrial policies or enterprise restructuring, the responsibility of approval shall remain with the State Economic and Trade Commission; in case it involves management of state-owned share rights, the responsibility of approval shall remain with the Ministry of Finance. As for major issues, they shall be submitted to the State Council for approval. The transfer of state-owned shares or corporate shares to a foreign investor must comply with the provisions of China Securities Regulatory Commission on acquisition, information disclosure, etc. of listed companies. No place or department shall unlawfully transfer the state-owned shares or corporate shares of listed companies to foreign investors. V. The parties to the transfer shall, with the documents of the State Economic and Trade Commission and the Ministry of Finance on the approval of the transfer and the payment voucher of the foreign investor, make a registration on the transfer of the share rights in the securities registration and settlement institution in accordance with the law, and make a registration on the modification of shareholders in the administration for industry and commerce. Before the price of transfer is paid, neither the securities registration and settlement institution nor the administration for industry and commerce shall handle the transfer registration or the modification registration. VI. In the transfer of the state-owned shares or corporate shares of a listed company to a foreign investor, the parties to the transfer shall, prior to the registration of transfer of the share rights, make a foreign investment and exchange registration in the department of foreign exchange control; in case the re-transfer of any share rights of the foreign investor is involved, they shall, prior to the registration of transfer of the share rights, make a registration on modification of foreign investments and exchanges in the department of foreign exchange control. VII. A foreign investor shall pay the transfer price in convertible currency. A foreign investor who has invested inside the territory of China may, upon approval by the department of foreign exchange control, also make the payment in his Renminbi profits from the investment. A foreign investor may re-transfer the shares he has acquired in twelve months as of his payment of all the transfer price. VIII. For the transfer of the foreign exchange income from state-owned shares or corporate shares, the transferor shall, within the stipulated period, settle the exchanges with the documents on the approval of the transfer after being approved by the department of foreign exchange control. After a foreign investor accepts the state-owned shares or corporate shares of a listed company, his net profits obtained from the listed company, his income from the re-transfer of the share rights and the funds distributed after the termination and liquidation of the listed company may, upon approval by the department of foreign exchange control, be converted into foreign exchanges and remitted outside the territory in accordance with the law. IX. After the state-owned shares or corporate shares of a listed company have been transferred to a foreign investor, the listed company shall still implement the relevant original policies, and shall not enjoy the treatment as a foreign-funded enterprise. The income from the transfer of state-owned shares shall be disposed of and used in accordance with the relevant provisions of the state. X. The transfer of the state-owned shares and corporate shares of listed companies to investors from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Region shall be subject to the governance of the present notice. |
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