Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies
Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies
Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies
Order of the Ministry of Commerce of the People's Republic of China, the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the State Taxation Administration, the State Administration for Market Regulation, and the State Administration of Foreign Exchange [2024] No. 3
November 1, 2024
The Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies, adopted at the 13th executive meeting of the Ministry of Commerce on August 15, 2024, and approved by the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the State Taxation Administration, the State Administration for Market Regulation, and the State Administration of Foreign Exchange, are hereby promulgated and shall come into effect on December 2, 2024.
Wang Wentao, Minister of Commerce:
Wu Qing, Chairman of China Securities Regulatory Commission
Zhang Yuzhuo, Director of the State-owned Assets Supervision and Administration Commission of the State Council
Hu Jinglin, Director of the State Taxation Administration
Luo Wen, Director of the State Administration for Market Regulation
Zhu Hexin, Director of the State Administration of Foreign Exchange
Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies
Article 1 These Measures are formulated in accordance with the Foreign Investment Law of the People's Republic of China (the “Foreign Investment Law”), the Securities Law of the People's Republic of China (the “Securities Law”), and other laws and regulations to promote high-level opening-up, intensify efforts to attract and utilize foreign investment, introduce funds and management experience from abroad, improve the corporate governance structures of listed companies, guide foreign investors to implement strategic investment in listed companies in an orderly and regulated manner, maintain order in the securities market, and protect the legitimate rights and interests of listed companies and shareholders.
Article 2 These Measures shall apply to the acquisition and medium- to long-term holding of A shares in listed companies by foreign investors through private placements of new shares by listed companies, share transfer agreements, tender offers, or other means as stipulated by national laws and regulations (hereinafter referred to as "strategic investment").
Article 3 The term "foreign investor" as used in these Measures refers to a foreign natural person, enterprise, or other organization.
The term "listed company" as used in these Measures refers to an A-share listed company.
Article 4 Strategic investment shall adhere to the following principles:
(1) It shall abide by national laws and regulations, and must not endanger national security or social public interest;
(2) It shall uphold the principles of openness, fairness and impartiality, maintain the legitimate rights and interests of listed companies and their shareholders, accept oversight from the government and the public, apply Chinese laws, and submit to Chinese judicial and arbitration jurisdiction;
(3) It shall engage in medium- to long-term investment and maintain normal order in the securities market, and must not engage in speculative activities; and
(4) It must not impede fair competition and must not exclude or restrict competition.
Article 5 Foreign investors shall not conduct strategic investment in listed companies that are involved in any prohibited areas of investment specified in the negative list for foreign investment access; foreign investors conducting strategic investment in listed companies involved in any restricted areas of investment specified in the negative list for foreign investment access shall comply with the special management measures for restricted access outlined in the negative list, including requirements regrading equity interest and senior management personnel.
Article 6 Foreign investors shall meet the following criteria:
(1) For foreign enterprises or other organizations, they shall be legally established and operating, with a robust financial position, good credit standing and sophisticated management experience, have a sound governance structure and good internal control systems, and operate business in a compliant manner; for foreign natural persons, they shall have the corresponding risk identification and risk-bearing capabilities;
(2) They shall have total actual assets of no less than USD 50 million or manage total actual assets of no less than USD 300 million; to become the controlling shareholder of a listed company, a foreign investor shall have total actual assets of no less than USD 100 million or manage total actual assets of no less than USD 500 million; and
(3) They shall have not been subject to criminal penalties or major penalties imposed by Chinese or overseas regulatory authorities within the past three years; for enterprises or other organizations established for less than three years, this period shall be calculated from the date of establishment.
If a foreign enterprise or other organization does not meet the criterion stipulated in subparagraph (2) of the preceding paragraph regarding total actual assets or managed total actual assets, but is wholly owned by an investor (meaning a foreign natural person, enterprise, or other organization that wholly owns the entity) that meets this criterion, the foreign enterprise or other organization may still conduct strategic investment under these Measures; in such cases, the investor wholly owing the entity shall make a commitment or reach an agreement with the foreign enterprise or other organization to jointly assume responsibility for the relevant investment activities.
Article 7 If a foreign investor uses the equity interest they hold in an overseas company or new shares they issue as the means of payment to implement strategic investment in a listed company, the following criteria shall also be met:
(1) The overseas company shall be legally established, its place of registration shall have a sound corporate law regime, and neither the overseas company nor its management have been subject to major penalties imposed by Chinese or overseas regulatory authorities within the past three years; if the strategic investment is implemented through a share transfer agreement, the overseas company shall be a listed company;
(2) The foreign investor shall legally hold and be able to legally transfer the equity interest in the overseas company, or shall legally issue the new shares;
(3) The Securities Law, the Company Law of the People's Republic of China, and the relevant regulations of the State Council, the securities regulatory authority under the State Council, the stock exchange, and the securities registration and clearing institution shall be complied with;
(4) The regulations on the administration of outbound investment shall be complied with, and relevant procedures shall be completed.
Article 8 When conducting strategic investment, foreign investors and listed companies shall engage financial advisors, sponsors, or law firms (hereinafter collectively referred to as "intermediary institutions") registered in China that meet the requirements specified in the Securities Law, to act as advisors.
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Order of the Ministry of Commerce of the People's Republic of China, the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the State Taxation Administration, the State Administration for Market Regulation, and the State Administration of Foreign Exchange [2024] No. 3
November 1, 2024
The Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies, adopted at the 13th executive meeting of the Ministry of Commerce on August 15, 2024, and approved by the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the State Taxation Administration, the State Administration for Market Regulation, and the State Administration of Foreign Exchange, are hereby promulgated and shall come into effect on December 2, 2024.
Wang Wentao, Minister of Commerce:
Wu Qing, Chairman of China Securities Regulatory Commission
Zhang Yuzhuo, Director of the State-owned Assets Supervision and Administration Commission of the State Council
Hu Jinglin, Director of the State Taxation Administration
Luo Wen, Director of the State Administration for Market Regulation
Zhu Hexin, Director of the State Administration of Foreign Exchange
Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies
Article 1 These Measures are formulated in accordance with the Foreign Investment Law of the People's Republic of China (the “Foreign Investment Law”), the Securities Law of the People's Republic of China (the “Securities Law”), and other laws and regulations to promote high-level opening-up, intensify efforts to attract and utilize foreign investment, introduce funds and management experience from abroad, improve the corporate governance structures of listed companies, guide foreign investors to implement strategic investment in listed companies in an orderly and regulated manner, maintain order in the securities market, and protect the legitimate rights and interests of listed companies and shareholders.
Article 2 These Measures shall apply to the acquisition and medium- to long-term holding of A shares in listed companies by foreign investors through private placements of new shares by listed companies, share transfer agreements, tender offers, or other means as stipulated by national laws and regulations (hereinafter referred to as "strategic investment").
Article 3 The term "foreign investor" as used in these Measures refers to a foreign natural person, enterprise, or other organization.
The term "listed company" as used in these Measures refers to an A-share listed company.
Article 4 Strategic investment shall adhere to the following principles:
(1) It shall abide by national laws and regulations, and must not endanger national security or social public interest;
(2) It shall uphold the principles of openness, fairness and impartiality, maintain the legitimate rights and interests of listed companies and their shareholders, accept oversight from the government and the public, apply Chinese laws, and submit to Chinese judicial and arbitration jurisdiction;
(3) It shall engage in medium- to long-term investment and maintain normal order in the securities market, and must not engage in speculative activities; and
(4) It must not impede fair competition and must not exclude or restrict competition.
Article 5 Foreign investors shall not conduct strategic investment in listed companies that are involved in any prohibited areas of investment specified in the negative list for foreign investment access; foreign investors conducting strategic investment in listed companies involved in any restricted areas of investment specified in the negative list for foreign investment access shall comply with the special management measures for restricted access outlined in the negative list, including requirements regrading equity interest and senior management personnel.
Article 6 Foreign investors shall meet the following criteria:
(1) For foreign enterprises or other organizations, they shall be legally established and operating, with a robust financial position, good credit standing and sophisticated management experience, have a sound governance structure and good internal control systems, and operate business in a compliant manner; for foreign natural persons, they shall have the corresponding risk identification and risk-bearing capabilities;
(2) They shall have total actual assets of no less than USD 50 million or manage total actual assets of no less than USD 300 million; to become the controlling shareholder of a listed company, a foreign investor shall have total actual assets of no less than USD 100 million or manage total actual assets of no less than USD 500 million; and
(3) They shall have not been subject to criminal penalties or major penalties imposed by Chinese or overseas regulatory authorities within the past three years; for enterprises or other organizations established for less than three years, this period shall be calculated from the date of establishment.
If a foreign enterprise or other organization does not meet the criterion stipulated in subparagraph (2) of the preceding paragraph regarding total actual assets or managed total actual assets, but is wholly owned by an investor (meaning a foreign natural person, enterprise, or other organization that wholly owns the entity) that meets this criterion, the foreign enterprise or other organization may still conduct strategic investment under these Measures; in such cases, the investor wholly owing the entity shall make a commitment or reach an agreement with the foreign enterprise or other organization to jointly assume responsibility for the relevant investment activities.
Article 7 If a foreign investor uses the equity interest they hold in an overseas company or new shares they issue as the means of payment to implement strategic investment in a listed company, the following criteria shall also be met:
(1) The overseas company shall be legally established, its place of registration shall have a sound corporate law regime, and neither the overseas company nor its management have been subject to major penalties imposed by Chinese or overseas regulatory authorities within the past three years; if the strategic investment is implemented through a share transfer agreement, the overseas company shall be a listed company;
(2) The foreign investor shall legally hold and be able to legally transfer the equity interest in the overseas company, or shall legally issue the new shares;
(3) The Securities Law, the Company Law of the People's Republic of China, and the relevant regulations of the State Council, the securities regulatory authority under the State Council, the stock exchange, and the securities registration and clearing institution shall be complied with;
(4) The regulations on the administration of outbound investment shall be complied with, and relevant procedures shall be completed.
Article 8 When conducting strategic investment, foreign investors and listed companies shall engage financial advisors, sponsors, or law firms (hereinafter collectively referred to as "intermediary institutions") registered in China that meet the requirements specified in the Securities Law, to act as advisors.
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