CSRC tightens acquisition rules
February 27, 2012 Category Mergers & Acquisitions, Weekly
The China Securities Regulatory Commission (CSRC) has ordered that major shareholders, defined as those who hold more than 50% of a listed company’s issued stocks, must disclose every 1% increase in their stakes during an acquisition process. If the increase exceeds 2%, these shareholders must halt purchases for the rest of the day and the next as well. The previous disclosure rule covered changes of 5% or more. The new rule could reduce price volatility and enhance the fairness of trade, said a CSRC official. The Commission also said that shareholders with stakes of larger than 30% may only increase their holdings by an amount equivalent to less than 2% of the total volume in the previous 12 months. The changes will take effect on March 15. They signal tighter supervision of acquisitions involving listed companies, said Yang Hai, Chief Analyst at China Financial Online, a professional stock market information and services company. “Making a fortune overnight could become very hard for acquiring companies,” Yang said. “It could lead to more rational investments.” The CSRC also announced rules covering expert advisory committees for listed company acquisitions. Committee members have a duty to provide professional advice about legislation, accounting and asset appraisal for listed companies, the CSRC said. The experts, who can serve for up to three consecutive years at a time, are nominated by the CSRC. The maximum number of committee members is 35. CSRC Chairman Guo Shuqing called for the acceleration of market-oriented acquisitions of public companies through improved supervision, the China Daily reports.
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