CSRC: Planning to Expand Types of Strategic Investors and Clarify Minimum Shareholding Requirements

The China Securities Regulatory Commission is publicly soliciting opinions on the “Decision (Draft for Comments) on the Application of Relevant Provisions of Articles 9, 10, 11, 13, 40, 57, and 60 of the Measures for the Administration of Securities Issuance and Registration of Listed Companies” (Draft for Comments). The main modifications are:

1. Expanding the types of strategic investors. Clearly define institutional investors such as the National Social Security Fund, Basic Pension Insurance Fund, Enterprise (Occupational) Annuity Funds, Commercial Insurance Funds (insurance companies using insurance funds for self-investment or entrusted insurance asset management institutions, as well as equity investment plans issued by related insurance asset management institutions as single investors), public funds, and bank wealth management as eligible strategic investors, using patient capital as a strategic resource for listed companies. Additionally, these investors are classified as capital investors, while other industrial investors are classified as industrial investors.

2. Clarifying the minimum shareholding requirement. Maintain that strategic investors should hold a significant proportion of shares in the listed company, further specify that the current subscription of shares by strategic investors should generally not be less than 5%, and they may participate in corporate governance based on their shareholding ratio.

3. Clarifying the basic requirements for capital investors. Based on long-term and substantial shareholding and director nomination participation in corporate governance, require capital investors to have an in-depth understanding of the industry development of the listed company, be able to help introduce strategic resources, or significantly improve the company’s governance and internal controls, promote market resource integration, or enhance core competitiveness.

4. Improving information disclosure requirements. Require listed companies to disclose the implementation and effects of strategic resource introduction and integration in their annual reports.

5. Further strengthening regulatory requirements. Emphasize that strategic investors must not circumvent minimum shareholding ratios or share lock-up periods through any means, and prevent illegal behaviors such as nominee holdings or indirect reductions, to safeguard the credibility of the system.

6. Improving related textual expressions. Based on practical experience, simplify relevant statements for rules that already have clear requirements in higher-level regulations, further enhancing clarity and understandability.

(Source: Jiemian News)