Capital Markets

2010 – The year ahead
As the world meets in Copenhagen, CLP takes its annual look at the issues likely to grab headlines in the year to come, and finds that the future for China is green. In support of a shifting focus to sustainable development, the country’s next five-year plan is likely to emphasise cleantech, low-carbon schemes and renewable energy

Capital markets: Evolution in Shanghai; make or break for ChiNext
2010 is shaping up to be a significant year for China’s capital markets, as they continue their struggle back to life after 10 months’ inactivity

China Insurance Regulatory Commission, Guidelines for the Establishment of Infrastructure Bond Investment Plan Products [Legislation Digest]
中国保险监督管理委员会基础设施债权投资计划产品设立指引
More stringent requirements for insurance asset management companies establishing infrastructure bond investment plan products.

China Securities Regulatory Commission, Tentative Measures for the Administration of the Business of Evaluation of Securities Investment Funds [Legislation Digest]
中国证券监督管理委员会证券投资基金评价业务管理暂行办法
CSRC bans the rating of funds under three years of age.

Guidelines for the Establishment of Infrastructure Bond Investment Plan Products [Full Text Translation]
基础设施债权投资计划产品设立指引
The Guidelines set forth the conditions with which an insurance asset management company or trust company shall comply when engaging in the infrastructure bond investment plan business.

Shenzhen Stock Exchange, Rules for Listing of Corporate Bonds [Legislation Digest]
深圳证券交易所公司债券上市规则
Shenzhen Stock Exchange has differing administrations for bonds.

Shenzhen Stock Exchange, Implementing Rules for Handling Unusual Trading Circumstances (Trial Implementation) [Legislation Digest]
深圳证券交易所交易异常情况处理实施细则 (试行)
Shenzhen Stock Exchange imposes measures in case of unusual trading circumstances.

Shanghai Stock Exchange, Rules for Listing of Corporate Bonds (2009 Revision) [Legislation Digest]
上海证券交易所公司债券上市规则 (2009年修订版)
Shanghai Stock Exchange has differing administrations for bonds.

Risk and reward in the China derivatives market
Regulators in China have been trying hard to promote the development of the derivatives industry. But the focus will always be on minimising risk

Shanghai Stock Exchange, Circular on Adjusting Matters Relevant to the Offering, Listing and Trading of Corporate Bonds [Legislation Digest]
上海证券交易所关于调整公司债券发行、上市、交易有关事宜的通知
Bonds not meeting criteria may only be offered to institutional investors through the Shanghai Stock Exchange.

Shanghai Stock Exchange, Implementing Rules for Handling Unusual Trading Circumstances (Trial Implementation) [Legislation Digest]
上海证券交易所交易异常情况处理实施细则 (试行)
Shanghai Stock Exchange imposes measures in case of unusual trading circumstances.

Preliminary comparison between ChiNext and SME

State Administration of Foreign Exchange, Provisions on Foreign Exchange Control in Connection with Securities Investments in China by Qualified Foreign Institutional Investors [Legislation Digest]
国家外汇管理局合格境外机构投资者境内证券投资外汇管理规定
Transfer of a QFII’s investment limit is no longer allowed.

Provisions on Foreign Exchange Control in Connection with Securities Investments in China by Qualified Foreign Institutional Investors [Full Text Translation]
合格境外机构投资者境内证券投资外汇管理规定
The Provisions raise the maximum investment limit of a QFII to US$1 billion but also prohibit a QFII from transferring such limit.

State Administration of Foreign Exchange, Circular on Issues Relevant to Foreign Exchange Control in Connection with Overseas Securities Investments of Fund Management Companies and Securities Companies [Legislation Digest]
国家外汇管理局关于基金管理公司和证券公司境外证券投资外汇管理有关问题的通知
Investment limit of a QDII may be taken back by Safe if not used effectively.

China Insurance Regulatory Commission, Circular on Matters Relevant to Bond Investment [Legislation Digest]
中国保险监督管理委员会关于债券投资有关事项的通知
Ratio of bond investment of insurance companies increased.

Shenzhen Stock Exchange, Guidelines on the Regulated Operation of Companies Listed on the Chinext [Legislation Digest]
深圳证券交易所创业板上市公司规范运作指引
Proceeds in excess of companies listed on China Gem may not be used for securities investment.

Opening up the market for QFII investment in China's securities market
New rules allow greater investments in China’s capital markets and impose a shorter lock-up period, but failure to comply could lead to the loss of QFII status

Chinese regulation is too complicated

IPOs fail to stop China sliding in financial development rankings

Ministry of Commerce, People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission, Measures for Calculation of Business Turnover for the Reporting of Concentrations of Business Operators in the Financial Sector [Legislation Digest]
商务部、中国人民银行、中国银行业监督管理委员会、中国证券监督管理委员会、中国保险监督管理委员会金融业经营者集中申报营业额计算办法
More scrutiny of banks’ M&A activity.

How HSBC can list in Shanghai
For now, it seems impossible for HSBC Holdings and other foreign-incorporated companies to list in mainland China. Changing that will take a lot of work

Measures for Calculation of Business Turnover for the Reporting of Concentrations of Business Operators in the Financial Sector [Full Text Translation]
金融业经营者集中申报营业额计算办法
The Measures explain the calculation of the business turnover of banking financial institutions, securities companies, futures companies, fund management companies and insurance companies for the reporting of concentrations of business operators.

People’s Bank of China, Announcement [2009] No.11 [Legislation Digest]
中国人民银行公告 〔2009〕 第11号
Securities asset management business of securities company allowed access to the interbank bond market.

State-owned Assets Supervision and Administration Commission of the State Council, Several Opinions on Regulating the Activities of State-owned Shareholders of Listed Companies [Legislation Digest]
国务院国有资产监督管理委员会关于规范上市公司国有股东行为的若干意见
Sasac restricts state-owned shareholders from reducing shareholdings.

Provisions for the Administration of the Provision of Financial Information Services in China by Foreign Organisations [Full Text Translation]
外国机构在中国境内提供金融信息服务管理规定
The Provisions set forth the procedures for examination and approval of provision of financial information services and the establishment of such enterprises.

State-owned Assets Supervision and Administration Commission of the State Council, Circular on Matters Relevant to Regulation of Asset Re-organisation of Listed Companies Carried out by State-owned Shareholders [Legislation Digest]
国务院国有资产监督管理委员会关于规范国有股东与上市公司进行资产重组有关事项的通知
Asset re-organisation of listed companies carried out by state-owned shareholders requires advance approval before information disclosure.

State-owned Assets Supervision and Administration Commission of the State Council, Circular on Matters Relevant to Regulation of the Offering of Exchangeable Bonds by State-owned Shareholders of Listed Companies and the Offering of Securities by State-controlled Listed Companies [Legislation Digest]
国务院国有资产监督管理委员会关于规范上市公司国有股东发行可交换公司债券及国有控股上市公司发行证券有关事项的通知
Pricing for exchangeable bonds made clear.

State Council Information Office, Ministry of Commerce and State Administration for Industry and Commerce, Provisions for the Administration of the Provision of Financial Information Services in China by Foreign Organisations [Legislation Digest]
国务院新闻办公室、商务部、国家工商行政管理总局外国机构在中国境内提供金融信息服务管理规定
China issue rules to regulate provision of financial information services by foreign organisations.

New rules strengthen supervision of asset restructuring

Guiding Opinion on Further Reform and Enhancement of the System for Offering of New Shares [Full Text Translation]
关于进一步改革和完善新股发行体制的指导意见
For each stock offering, any one private placement target may opt to subscribe the new shares either offline or online, but not both.

IPO momentum builds as regulator relaxes oversight
New rules signal shift toward market-driven approach

China Securities Regulatory Commission, Guiding Opinion on Further Reform and Enhancement of the System for Offering of New Shares [Legislation Digest]
中国证券监督管理委员会关于进一步改革和完善新股发行体制的指导意见
CSRC revises the pricing method for offering of new shares.

Ministry of Finance, State-owned Assets Supervision and Administration Commission of the State Council, China Securities Regulatory Commission and National Council for Social Security Fund, Implementing Measures for the Transfer of Certain State-owned Shares from the Domestic Securities Market to the National Social Security Fund [Legislation Digest]
财政部、国务院国有资产监督管理委员会、中国证券监督管理委员会、全国社会保障基金理事会境内证券市场转持部分国有股充实全国社会保障基金实施办法
China issues measures to prevent mass unloading of previously non-tradable shares.

Shenzhen Stock Exchange, Share Listing Rules for the Growth Enterprise Market [Legislation Digest]
深圳证券交易所创业板股票上市规则
Shenzhen Gem has more stringent rules on delisting.

New IPO rules and challenges for domestic funds

Gem provides quick exit for private equity
A new junior board will open in Shenzhen later this year and will provide a reasonably quick exit for foreign private equity firms. But good structuring is vital to avoid years of delays

State Administration of Foreign Exchange, Circular on Revising the Examination and Approval Authority for Certain Capital Account-related Foreign Exchange Transactions [Legislation Digest]
国家外汇管理局关于调整部分资本项目外汇业务审批权限的通知
Safe delegates its approval authority over capital account items to lower authorities.

Anything but an easy ride for Shanghai
However you define an international financial centre, there are many hurdles ahead for Shanghai

CIRC facilitates fund investments

Circular on Regulating Stock Investments of Insurance Institutions [Full Text Translation]
关于规范保险机构股票投资业务的通知
An insurance company or insurance asset management company shall establish different grades of stock pools, such as a prohibited pool, reserve pool and core pool.

Circular on Increasing the Scope of Bond Products in which Insurance Institutions May Invest [Full Text Translation]
关于增加保险机构债券投资品种的通知
Insurance companies allowed to invest in local government bonds, medium-term notes and Hong Kong-issued SOE bonds.

Little red-chips get an overseas opening
China’s M&A Rules effectively blocked domestic Chinese companies from raising money on overseas capital markets. But recent Ministry of Commerce guidelines may have provided a way out. By Zhou Jiaxing, Or & Partners, Hong Kong.

Measures for the Administration of the Transfer of State-owned Assets of Financial Enterprises [Full Text Translation]
金融企业国有资产转让管理办法
Transfers of state-owned assets and equity of unlisted enterprises shall be publicly carried out through lawfully- established assets and equity exchanges at the provincial level and above.

China Insurance Regulatory Commission, Circular on Regulating Stock Investments of Insurance Institutions [Legislation Digest]
中国保险监督管理委员会关于规范保险机构股票投资业务的通知
Insurance companies required to set up graded stock pools.

China Insurance Regulatory Commission, Circular on Increasing the Bond Products in which Insurance Institutions May Invest [Legislation Digest]
中国保险监督管理委员会关于增加保险机构债券投资品种的通知
Insurance companies can now invest in more types of bonds.

Shimao makes significant top-up placement in Hong Kong

Silver Base lists in Hong Kong

China Securities Regulatory Commission, Provisions on Strengthening the Regulation of Listed Securities Companies [Legislation Digest]
中国证券监督管理委员会关于加强上市证券公司监管的规定
Securities offerings of securities companies shall comply with both general securities offering requirements and specific CSRC requirements.

China Securities Regulatory Commission, Guidelines on Contents and Formats for Information Disclosure of Securities Offering Companies Guidelines (No.27): Offering Sponsorship Letters and Offering Sponsorship Work Reports [Legislation Digest]
中国证券监督管理委员会发行证券的公司信息披露内容与格式准则第27号——发行保荐书和发行保荐工作报告
Sponsors required to disclose principal risks of listed companies.

China Securities Regulatory Commission, Guidelines on Working Drafts for the Sponsorship of the Offering and Listing of Securities [Legislation Digest]
中国证券监督管理委员会证券发行上市保荐业务工作底稿指引
Working drafts for sponsor work must be kept for 10 years.

Ministry of Finance, Measures for the Administration of the Transfer of State-owned Assets of Financial Enterprises [Legislation Digest]
财政部金融企业国有资产转让管理办法
Transfers of state-owned assets of unlisted financial institutions must be done publicly.

Beijing Municipality, Opinion on Promoting the Economic Development of the Capital with Financial Policies [Legislation Digest]
北京市关于金融促进首都经济发展的意见
Establishment of Reits in Beijing encouraged.

PRC Criminal Law Amendment Act (7) [Legislation Digest]
中华人民共和国刑法修正案 (七)
Tougher penalties for insider dealing.

PRC Gem rules released
IPOs allowed on junior board from May

First local government bonds issued
Xinjiang gets new chance to raise money

China Securities Regulatory Commission, Tentative Measures for the Administration of Initial Public Offerings of Shares and the Listing Thereof on the Growth Enterprise Market [Legislation Digest]
中国证券监督管理委员会首次公开发行股票并在创业板上市管理暂行办法
Entry to China’s Gem requires at least Rmb20 million of net assets.

CITIC does rare PIPE deal

Nine Dragons makes senior notes offer

Rights issue offers way forward for Franshion Properties

State-owned Assets Supervision and Administration Commission of the State Council, Circular on Further Strengthening the Regulation of Financial Derivatives Transactions of Centrally-governed Enterprises [Legislation Digest]
国务院国有资产监督管理委员会关于进一步加强中央企业金融衍生业务监管的通知
Centrally-governed enterprises may only trade derivatives for hedging.

Investment advisers’ role in private equity investment trusts

Measures for the Administration of the Registration of Capital Contribution in the Form of Equity [Full Text Translation]
股权出资登记管理办法
The total of the amount of capital contribution in the form of valuated equity and of capital contribution in the form of other valuated non-monetary property by all of the shareholders may not exceed 70% of the registered capital of the investee company.

State Administration for Industry and Commerce, Measures for the Administration of the Registration of Capital Contribution in the Form of Equity [Legislation Digest]
国家工商行政管理总局股权出资登记管理办法
Capital contribution in the form of equity gets its official go-ahead.

How to create charge over listed shares in China

People’s Bank of China Announcement [2009] No.1 [Legislation Digest]
中国人民银行公告〔2009〕第1号
Restriction on the size of bond offerings on the interbank bond market lifted.

Listed firms must disclose foreign holdings
Information on foreign assets and liabilities to be included in annual reports

China Securities Regulatory Commission and China Banking Regulatory Commission, Circular on Issues Relevant to the Launch of the Pilot Project for Participation in Bond Trading on Stock Exchanges by Listed Commercial Banks [Legislation Digest]
中国证券监督管理委员会、中国银行业监督管理委员会关于开展上市商业银行在证券交易所参与债券交易试点有关问题的通知
Bond trading by listed companies makes a comeback.

PRC companies’ acquisition of shares in Singapore-listed companies

PRC-listed companies face new cash dividend requirements