Unloading State-owned Shares: Another Trial Under New Rules
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clpstaff &clp articlesAfter failed attempts in 1999 and 2001, China is again taking the necessary but daunting step of integrating its non-tradable state-owned shares with those that are tradable. Could this be the catalyst that the mainland IPO and restructuring markets need?
By Michael G. DeSombre and Weiheng Chen, Sullivan & Cromwell LLP, Hong Kong
On April 29 2005, the China Securities Regulatory Commission (CSRC) promulgated the Issues Relevant to Pilot Reform Projects Regarding the Separation of Equity Ownership and Trading Rights of Listed Companies Circular(关于上市公司股权分置改革试点有关问题的通知) (the Circular, see p.35 for full translation), which unveiled the latest policy trial to resolve the high profile and highly contentious issue of reducing the government's ownership in listed companies. The Circular initiates a pilot program to resolve the legacy issue of non-tradable shares - a move that could pave the way for the gradual release of approximately two-thirds of the total shares of com panies listed on China's stock exchanges and currently locked-up in the hands of the government and state-owned enterprises (SOEs). If successfully implemented, the Circular could finally result in the integration of segmented share structures for most of China's publicly listed companies.
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