In order to implement the "Several Opinions of the State Council on Strengthening Supervision and Preventing Risks to Promote High quality Development of the Capital Market" and the "Opinions on Strengthening Supervision of Listed Companies (Trial)", the China Securities Regulatory Commission recently issued the "Interim Measures for the Management of Shareholders' Reduction of Shares in Listed Companies" (hereinafter referred to as the "Reduction Management Measures"). It is understood that the reduction system is an important foundational system in the capital market. In order to implement the recent relevant documents on comprehensively improving the system of reduction rules, strictly regulating the reduction of holdings by major shareholders, especially controlling shareholders and actual controllers, and resolutely preventing various detours in reduction, the China Securities Regulatory Commission has drafted the "Reduction Management Measures" on the basis of the "Several Provisions on Reduction of Shares by Shareholders, Directors, Supervisors, and Senior Managers of Listed Companies" (hereinafter referred to as the "Reduction Regulations"). The Measures for the Administration of Share Reduction consist of 31 articles, which maintain the basic framework and core content of the Regulations on Share Reduction, elevate the original normative documents to regulations, and improve relevant content in response to prominent issues reflected in the market: strictly regulate the reduction of shares by major shareholders. Clarify that controlling shareholders and actual controllers are not allowed to reduce their holdings through centralized bidding or bulk trading in situations such as breaking through, breaking through net assets, or failing to meet dividend standards; Increase the pre disclosure obligation of major shareholders before reducing their holdings through bulk trading; Require the concerted action of major shareholders to jointly comply with the reduction restrictions. Effectively prevent detours and reduce holdings. Require the transferee of the transfer agreement to lock in for six months; Clarify that all parties will continue to comply with the reduction restrictions after the stock split due to divorce, dissolution, separation, etc; Clarify the application of relevant reduction requirements based on different reduction methods, such as judicial enforcement, default disposal of pledged financing and securities lending, etc; Prohibit major shareholders from short selling securities or participating in derivative transactions with our company's stocks as the subject matter; Prohibit the transfer of restricted shares to financing and lending, as well as the sale of securities by restricted shareholders. Refine the liability clauses for violations. Clearly define the measures that can be taken to order the repurchase and transfer the price difference to the listed company for illegal reduction of holdings, and list the specific circumstances that should be punished. In addition, the obligations of listed companies and board secretaries have been strengthened. The China Securities Regulatory Commission has also issued the revised "Management Rules for the Shares and Changes of Directors, Supervisors, and Senior Management Personnel of Listed Companies", which incorporates and integrates the requirements of the "Reduction Regulations" to regulate the reduction of shares held by directors, supervisors, and senior executives. It further clarifies that all parties will continue to abide by the original reduction restrictions after the divorce of directors, supervisors, and senior executives and the separation of shares; Optimized the window period for prohibiting the buying and selling of stocks, and supported directors, supervisors, and senior executives to increase their holdings in accordance with the law. It is reported that in the next step, the China Securities Regulatory Commission will continue to strengthen the supervision of shareholder reduction behavior, severely crack down on and punish illegal reduction behavior, and maintain market trading order. (Lai Xin She)
Edit：Wangchen Responsible editor：Chenjie
Source：http://www.legaldaily.com.cn
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