Administrative Measures for the Material Asset Reorganization of Listed Companies (Revised in 2023)
Administrative Measures for the Material Asset Reorganization of Listed Companies (Revised in 2023)
Administrative Measures for the Material Asset Reorganization of Listed Companies (Revised in 2023)
Order of the China Securities Regulatory Commission No.214
February 17, 2023
The Administrative Measures for the Material Asset Reorganization of Listed Companies, which were deliberated and adopted at the 2nd executive meeting of 2023 of the China Securities Regulatory Commission on February 17, 2023, are hereby issued for implementation as of the date of issue.
Yi Huiman, Chairman of the China Securities Regulatory Commission
Appendix 1: Administrative Measures for the Material Asset Reorganization of Listed Companies (Revised in 2023)
(Adopted upon deliberation at the 224th Chairman Executive Meeting of the China Securities Regulatory Commission on March 24, 2008; amended in accordance with the Decision on Amending the Relevant Regulations on Material Asset Restructuring and Supporting Financing by Listed Companies issued by the China Securities Regulatory Commission on August 1, 2011; revised at the 52nd Chairman Executive Meeting of the China Securities Regulatory Commission on July 7, 2014; amended in accordance with the Decision on Revising the Administrative Measures for the Material Asset Reorganization of Listed Companies issued by the China Securities Regulatory Commission on September 8, 2016, the Decision on Revising the Administrative Measures for the Material Asset Reorganization of Listed Companies issued by the China Securities Regulatory Commission on October 18, 2019, and the Decision on Revising Some Securities and Futures Rules issued by the China Securities Regulatory Commission on March 20, 2020; revised at the Second Chairman Executive Meeting of the China Securities Regulatory Commission on February 17, 2023)
Chapter I General Provisions
Article 1 The Administrative Measures for the Material Asset Reorganization of Listed Companies (hereinafter referred to as the "Measures") are formulated pursuant to the provisions of the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China (the "Securities Law") and other relevant laws and administrative regulations, with a view to regulating the material asset reorganization of listed companies, protecting the lawful rights and interests of listed companies and investors, and promoting the constant improvement of the quality of listed companies, and maintaining the order of the securities market and the social public interests.
Article 2 The Measures apply to asset trading behaviors, other than the daily business activities, conducted by a listed company or companies held or controlled by it, such as the purchase and sale of assets, or asset trading by other means that reach a specified requirement, thereby causing significant changes to the primary business, assets, or income of the listed company (hereinafter referred to as "material asset reorganization").
Purchase of assets by a listed company by means of issuing shares shall be in compliance with the provisions of the Measures.
If a listed company, according to the fundraising purposes disclosed in the securities issuance application that is registered by the China Securities Regulatory Commission (hereinafter referred to as the "CSRC"), uses the raised funds to purchase assets or make outbound investments, the Measures shall not apply.
Article 3 No organization or individual shall damage the lawful rights and interests of listed companies and their shareholders by way of material asset reorganization.
Article 4 Where a listed company carries out material asset reorganization, the parties concerned must disclose or provide information in a timely and fair manner, ensure that the information disclosed or provided is authentic, accurate, and complete, and that the information disclosed or provided is free from any false record, misleading statement, or major omission.
Article 5 The directors, supervisors, and senior management personnel of a listed company shall, during the material asset reorganization, be faithful, diligent, and conscientious, maintain the safety of the company's assets, and protect the lawful rights and interests of the company and all the shareholders.
Article 6 Securities service institutions and personnel that provide services for material asset reorganization shall abide by the relevant provisions of laws, administrative regulations, and the CSRC, as well as the relevant rules of the stock exchange, observe the business criteria and code of ethics generally accepted in the sector, be honest, trustworthy, diligent and responsible, strictly perform their duties, and bear liability for the authenticity, accuracy, and completeness of the documents prepared and issued by them.
For the purpose of the preceding article, the securities service institutions and personnel shall not instigate, assist or collude with the client to prepare or disclose reports or announcements that contain any false record, misleading statement, or major omission, and shall not engage in unfair competition or make use of the material asset reorganization of the listed company to seek improper interests.
Article 7 Any organization or individual shall be obliged to keep confidential the information on material asset reorganization they have access to before such information is disclosed in accordance with the law.
Any organization or individual is prohibited from conducting insider dealing, manipulating the securities market, or committing other illegal acts by using the information on material asset reorganization.
Article 8 The CSRC shall supervise and administer the material asset reorganization of listed companies in accordance with the law.
The stock exchange shall formulate business rules for the material asset reorganization of listed companies in accordance with the law, and conduct self-regulatory management of the material asset reorganization of listed companies, and the performance of duties by securities service institutions and personnel.
Based on the review opinions of the stock exchange, the CSRC shall perform registration procedures for securities issuance applications involved in the issuance of shares by listed companies to purchase assets in accordance with the law, and supervise the review work of the stock exchange.
Article 9 The registration of an application for securities issuance involved in the issuance of shares by a listed company to purchase assets does not indicate substantive judgment or guarantee of the investment value of the securities or the investors' income by the CSRC and the stock exchange, nor does it indicate that the CSRC and the stock exchange warrant the authenticity, accuracy and completeness of the application documents.
Article 10 The merger and acquisition funds, equity investment funds, venture capital investment funds, industrial investment funds and other investment institutions established in accordance with the law are encouraged to participate in the merger, acquisition and reorganization of listed companies.
Chapter II Principles and Standards for Material Asset Reorganization
Article 11 When carrying out material asset reorganization, a listed company shall provide sufficient explanations and make disclosure of the compliance of the present transaction with the following requirements:
1. it shall meet the industrial policies of the State and the provisions of laws and administrative regulations on environmental protection, land administration, anti-monopoly, foreign investment and outbound investment;
2. it will not result in inconformity by the listed company with the stock listing conditions;
3. the price of assets involved in the material asset reorganization is fair, and there is no circumstance in which the lawful rights and interests of the listed company and the shareholders will be undermined;
4. the ownership of the assets involved in the material asset reorganization is clear, and there is no legal obstacle in the change of owner or transfer of such assets, and the relevant creditors' rights and debts are legally handled;
5. it is conducive to strengthening the listed company's sustained operational capacity, and there is no circumstance which may lead to the result that the main assets of the listed company are cash, or the listed company has no specific operational business after the reorganization;
6. it is good for the listed company to maintain independence from its actual controller or affiliated parties in terms of business, assets, finance, personnel, organization, and other aspects, and comply with the relevant provisions of the CSRC on the independence of listed companies; and
7. it is good for the listed company to form or maintain a healthy and effective legal person governance structure.
Article 12 Purchase or sale of assets by a listed company or a company held or controlled by it shall constitute the material asset reorganization provided that it meets any of the following standards:
1. the total amount of assets purchased or sold account for 50% or more of the total amount of end-of-period assets of the listed company in the consolidated financial and accounting report for the last accounting year that has been audited;
2. the operating income from the purchased or sold assets in the last accounting year accounts for 50% or more of the operating income in the consolidated financial and accounting report for the same period that has been audited and exceeds CNY50 million; or
3. the net assets purchased or sold account for 50% or more of the end-of-period net assets in the consolidated financial and accounting report for the last accounting year that has been audited, and exceed CNY50 million.
If the purchase or sale of assets does not reach the standards specified in the preceding paragraph, but the CSRC discovers that there are major problems that may undermine the lawful rights and interests of the public company or the investors, the CSRC may, according to the principle of prudent supervision and administration, order the public company to suspend the transactions, disclose the relevant supplementary information pursuant to the Measures and engage an independent financial advisor or any other securities service institution in compliance with the Securities Law to carry out supplementary verification and disclose the professional opinions.
Article 13 Where the purchase of assets by a listed company from the acquirer or the affiliated party thereof within 36 months of the date on which the control of the listing company is changed causes any of the following fundamental changes to the listed company, such purchase constitutes material asset reorganization, and the related obligations and procedures shall be performed in accordance with the Measures:
1. the total assets purchased account for 100% or more of the total amount of the end-of-period assets of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control of the listed company;
2. the operating income from the purchased assets in the last accounting year accounts for 100% or more of the operating income of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control of the listed company;
3. the net assets purchased account for 100% or more of the end-of-period net assets of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control of the listed company;
4. the shares issued for the purchase of assets account for 100% or more of the shares of the listed company on the trading day immediately before the resolution of the board of directors on the first purchase of assets by the listed company from the acquirer or the affiliated party thereof;
5. the purchase of assets by the listed company from the acquirer or the affiliated party thereof is not up to the standards set out in Items 1 to 4, and may cause fundamental changes to the primary business of the listed company; or
6. other circumstances that may cause fundamental changes to the listed company as identified by the CSRC.
To carry out the foregoing material asset reorganization, a listed company shall conform to the following provisions:
1. meet the requirements prescribed in Articles 11 and 43 herein;
2. the operational entity from which the assets are purchased by the listed company shall be a joint stock company or a limited liability company and meet the other issue conditions and positioning of the related sector prescribed in the Administrative Measures for Initial Public Offering and Registration of Shares as well as specific conditions set forth in the stock exchange;
3. neither of the listed company or its controlling shareholders or actual controllers in the recent three years has been involved in the circumstance where they are under investigation by a judicial organ due to a suspected criminal offense or by the CSRC due to the suspected violation of laws or regulations, except where it has been three full years since the termination of the suspected criminal offense or violation of laws or regulations, the transaction plan can eliminate the adverse consequence that is likely to be caused by such act and imposition of liability on the relevant persons committing the act is not affected;
4. neither of the listed company or its controlling shareholder or actual controller hasbeen publicly denounced by the stock exchange within the last 12 months or have committed any other major dishonest behavior; and
5. the material asset reorganization does not fall under other circumstances that may damage the investors' legitimate rights and interests, or go against the principles of openness, fairness and justice as identified by the CSRC.
Where a listed company implements material asset reorganization as prescribed in Paragraph 1, which involves the issuance of shares, the Securities Law and the relevant provisions of the CSRC shall apply, and the issuance of shares shall be reported to the CSRC for registration.
Control referred to in Paragraph 1 is identified in accordance with Article 84 of the Administrative Measures for the Takeover of Listed Companies. The directors and senior management personnel who can control the financial and operating decisions of a listed company which is decentralizing its equities shall be deemed as having control of the listed company.
Where the assets purchased by listed companies from the acquirers or the affiliated parties thereof as of the date on which the control is changed come from the finance, venture capital investment or other specific industries, separate provisions shall be formulated by the CSRC.
Article 14 For the calculation of the requirements specified in Articles 12 and 13 herein, the following provisions shall be complied with:
1.
......
Order of the China Securities Regulatory Commission No.214
February 17, 2023
The Administrative Measures for the Material Asset Reorganization of Listed Companies, which were deliberated and adopted at the 2nd executive meeting of 2023 of the China Securities Regulatory Commission on February 17, 2023, are hereby issued for implementation as of the date of issue.
Yi Huiman, Chairman of the China Securities Regulatory Commission
Appendix 1: Administrative Measures for the Material Asset Reorganization of Listed Companies (Revised in 2023)
(Adopted upon deliberation at the 224th Chairman Executive Meeting of the China Securities Regulatory Commission on March 24, 2008; amended in accordance with the Decision on Amending the Relevant Regulations on Material Asset Restructuring and Supporting Financing by Listed Companies issued by the China Securities Regulatory Commission on August 1, 2011; revised at the 52nd Chairman Executive Meeting of the China Securities Regulatory Commission on July 7, 2014; amended in accordance with the Decision on Revising the Administrative Measures for the Material Asset Reorganization of Listed Companies issued by the China Securities Regulatory Commission on September 8, 2016, the Decision on Revising the Administrative Measures for the Material Asset Reorganization of Listed Companies issued by the China Securities Regulatory Commission on October 18, 2019, and the Decision on Revising Some Securities and Futures Rules issued by the China Securities Regulatory Commission on March 20, 2020; revised at the Second Chairman Executive Meeting of the China Securities Regulatory Commission on February 17, 2023)
Chapter I General Provisions
Article 1 The Administrative Measures for the Material Asset Reorganization of Listed Companies (hereinafter referred to as the "Measures") are formulated pursuant to the provisions of the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China (the "Securities Law") and other relevant laws and administrative regulations, with a view to regulating the material asset reorganization of listed companies, protecting the lawful rights and interests of listed companies and investors, and promoting the constant improvement of the quality of listed companies, and maintaining the order of the securities market and the social public interests.
Article 2 The Measures apply to asset trading behaviors, other than the daily business activities, conducted by a listed company or companies held or controlled by it, such as the purchase and sale of assets, or asset trading by other means that reach a specified requirement, thereby causing significant changes to the primary business, assets, or income of the listed company (hereinafter referred to as "material asset reorganization").
Purchase of assets by a listed company by means of issuing shares shall be in compliance with the provisions of the Measures.
If a listed company, according to the fundraising purposes disclosed in the securities issuance application that is registered by the China Securities Regulatory Commission (hereinafter referred to as the "CSRC"), uses the raised funds to purchase assets or make outbound investments, the Measures shall not apply.
Article 3 No organization or individual shall damage the lawful rights and interests of listed companies and their shareholders by way of material asset reorganization.
Article 4 Where a listed company carries out material asset reorganization, the parties concerned must disclose or provide information in a timely and fair manner, ensure that the information disclosed or provided is authentic, accurate, and complete, and that the information disclosed or provided is free from any false record, misleading statement, or major omission.
Article 5 The directors, supervisors, and senior management personnel of a listed company shall, during the material asset reorganization, be faithful, diligent, and conscientious, maintain the safety of the company's assets, and protect the lawful rights and interests of the company and all the shareholders.
Article 6 Securities service institutions and personnel that provide services for material asset reorganization shall abide by the relevant provisions of laws, administrative regulations, and the CSRC, as well as the relevant rules of the stock exchange, observe the business criteria and code of ethics generally accepted in the sector, be honest, trustworthy, diligent and responsible, strictly perform their duties, and bear liability for the authenticity, accuracy, and completeness of the documents prepared and issued by them.
For the purpose of the preceding article, the securities service institutions and personnel shall not instigate, assist or collude with the client to prepare or disclose reports or announcements that contain any false record, misleading statement, or major omission, and shall not engage in unfair competition or make use of the material asset reorganization of the listed company to seek improper interests.
Article 7 Any organization or individual shall be obliged to keep confidential the information on material asset reorganization they have access to before such information is disclosed in accordance with the law.
Any organization or individual is prohibited from conducting insider dealing, manipulating the securities market, or committing other illegal acts by using the information on material asset reorganization.
Article 8 The CSRC shall supervise and administer the material asset reorganization of listed companies in accordance with the law.
The stock exchange shall formulate business rules for the material asset reorganization of listed companies in accordance with the law, and conduct self-regulatory management of the material asset reorganization of listed companies, and the performance of duties by securities service institutions and personnel.
Based on the review opinions of the stock exchange, the CSRC shall perform registration procedures for securities issuance applications involved in the issuance of shares by listed companies to purchase assets in accordance with the law, and supervise the review work of the stock exchange.
Article 9 The registration of an application for securities issuance involved in the issuance of shares by a listed company to purchase assets does not indicate substantive judgment or guarantee of the investment value of the securities or the investors' income by the CSRC and the stock exchange, nor does it indicate that the CSRC and the stock exchange warrant the authenticity, accuracy and completeness of the application documents.
Article 10 The merger and acquisition funds, equity investment funds, venture capital investment funds, industrial investment funds and other investment institutions established in accordance with the law are encouraged to participate in the merger, acquisition and reorganization of listed companies.
Chapter II Principles and Standards for Material Asset Reorganization
Article 11 When carrying out material asset reorganization, a listed company shall provide sufficient explanations and make disclosure of the compliance of the present transaction with the following requirements:
1. it shall meet the industrial policies of the State and the provisions of laws and administrative regulations on environmental protection, land administration, anti-monopoly, foreign investment and outbound investment;
2. it will not result in inconformity by the listed company with the stock listing conditions;
3. the price of assets involved in the material asset reorganization is fair, and there is no circumstance in which the lawful rights and interests of the listed company and the shareholders will be undermined;
4. the ownership of the assets involved in the material asset reorganization is clear, and there is no legal obstacle in the change of owner or transfer of such assets, and the relevant creditors' rights and debts are legally handled;
5. it is conducive to strengthening the listed company's sustained operational capacity, and there is no circumstance which may lead to the result that the main assets of the listed company are cash, or the listed company has no specific operational business after the reorganization;
6. it is good for the listed company to maintain independence from its actual controller or affiliated parties in terms of business, assets, finance, personnel, organization, and other aspects, and comply with the relevant provisions of the CSRC on the independence of listed companies; and
7. it is good for the listed company to form or maintain a healthy and effective legal person governance structure.
Article 12 Purchase or sale of assets by a listed company or a company held or controlled by it shall constitute the material asset reorganization provided that it meets any of the following standards:
1. the total amount of assets purchased or sold account for 50% or more of the total amount of end-of-period assets of the listed company in the consolidated financial and accounting report for the last accounting year that has been audited;
2. the operating income from the purchased or sold assets in the last accounting year accounts for 50% or more of the operating income in the consolidated financial and accounting report for the same period that has been audited and exceeds CNY50 million; or
3. the net assets purchased or sold account for 50% or more of the end-of-period net assets in the consolidated financial and accounting report for the last accounting year that has been audited, and exceed CNY50 million.
If the purchase or sale of assets does not reach the standards specified in the preceding paragraph, but the CSRC discovers that there are major problems that may undermine the lawful rights and interests of the public company or the investors, the CSRC may, according to the principle of prudent supervision and administration, order the public company to suspend the transactions, disclose the relevant supplementary information pursuant to the Measures and engage an independent financial advisor or any other securities service institution in compliance with the Securities Law to carry out supplementary verification and disclose the professional opinions.
Article 13 Where the purchase of assets by a listed company from the acquirer or the affiliated party thereof within 36 months of the date on which the control of the listing company is changed causes any of the following fundamental changes to the listed company, such purchase constitutes material asset reorganization, and the related obligations and procedures shall be performed in accordance with the Measures:
1. the total assets purchased account for 100% or more of the total amount of the end-of-period assets of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control of the listed company;
2. the operating income from the purchased assets in the last accounting year accounts for 100% or more of the operating income of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control of the listed company;
3. the net assets purchased account for 100% or more of the end-of-period net assets of the listed company in the consolidated financial and accounting report for the previous accounting year that was audited before the change of the control of the listed company;
4. the shares issued for the purchase of assets account for 100% or more of the shares of the listed company on the trading day immediately before the resolution of the board of directors on the first purchase of assets by the listed company from the acquirer or the affiliated party thereof;
5. the purchase of assets by the listed company from the acquirer or the affiliated party thereof is not up to the standards set out in Items 1 to 4, and may cause fundamental changes to the primary business of the listed company; or
6. other circumstances that may cause fundamental changes to the listed company as identified by the CSRC.
To carry out the foregoing material asset reorganization, a listed company shall conform to the following provisions:
1. meet the requirements prescribed in Articles 11 and 43 herein;
2. the operational entity from which the assets are purchased by the listed company shall be a joint stock company or a limited liability company and meet the other issue conditions and positioning of the related sector prescribed in the Administrative Measures for Initial Public Offering and Registration of Shares as well as specific conditions set forth in the stock exchange;
3. neither of the listed company or its controlling shareholders or actual controllers in the recent three years has been involved in the circumstance where they are under investigation by a judicial organ due to a suspected criminal offense or by the CSRC due to the suspected violation of laws or regulations, except where it has been three full years since the termination of the suspected criminal offense or violation of laws or regulations, the transaction plan can eliminate the adverse consequence that is likely to be caused by such act and imposition of liability on the relevant persons committing the act is not affected;
4. neither of the listed company or its controlling shareholder or actual controller hasbeen publicly denounced by the stock exchange within the last 12 months or have committed any other major dishonest behavior; and
5. the material asset reorganization does not fall under other circumstances that may damage the investors' legitimate rights and interests, or go against the principles of openness, fairness and justice as identified by the CSRC.
Where a listed company implements material asset reorganization as prescribed in Paragraph 1, which involves the issuance of shares, the Securities Law and the relevant provisions of the CSRC shall apply, and the issuance of shares shall be reported to the CSRC for registration.
Control referred to in Paragraph 1 is identified in accordance with Article 84 of the Administrative Measures for the Takeover of Listed Companies. The directors and senior management personnel who can control the financial and operating decisions of a listed company which is decentralizing its equities shall be deemed as having control of the listed company.
Where the assets purchased by listed companies from the acquirers or the affiliated parties thereof as of the date on which the control is changed come from the finance, venture capital investment or other specific industries, separate provisions shall be formulated by the CSRC.
Article 14 For the calculation of the requirements specified in Articles 12 and 13 herein, the following provisions shall be complied with:
1.
......