Preferred Stock Pilot Management

Original Language Title: 优先股试点管理办法

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Read the untranslated law here: http://www.chinalaw.gov.cn/article/fgkd/xfg/gwybmgz/201503/20150300398665.shtml

Preferred stock pilot management

    (March 21, 2014, China Securities Regulatory Commission, the 97th released come into force on the date of promulgation) Chapter I General provisions

    First as a standard preferred stock issuance and transactions, protect the legitimate rights and interests of investors, in accordance with the company law and the securities law, the State Department on preferred stock pilot guidance and related laws and regulations, these measures are formulated.

    Preferred stock in these measures refers to article II, in accordance with the Act, in addition to the General provisions of ordinary kinds of shares, envisaged with other kinds of shares, its share holders have priority over common shareholders distribution of corporate profits and surplus property, rights to participate in decision and management is limited.

    Third listed companies may issue preferred shares, unlisted public companies to private placement of preferred stock.

    Fourth pilot preferred shares should be in accordance with the company law and the securities law, the State Department on preferred stock pilot guidance and the relevant provisions of the measures, and follow the principle of openness, fairness, impartiality, prohibition of acts of fraud, insider trading and market manipulation.

    Article fifth Corporation participating preferred stock and other securities services agencies pilot shall abide by the laws and regulations and the China Securities Regulatory Commission (hereinafter referred to as the China Securities Regulatory Commission) regulations, following industry-recognized business standards and codes of conduct, honesty and diligence.

During the sixth pilot is not allowed to issue dividends and preferred shares that have different priorities on the distribution of the remaining property, but allowed to issue preferred shares in the other articles with different settings.

    Same company issuing compulsory dividend preference shares, terms of release does not contain mandatory dividend preferred stock, does not belong to the issue in the distribution of dividends on preferred shares that have different priorities. Same terms of the preferred shares shall have the same rights in seventh.

    Preferred issued at the same time on the same terms and conditions, prices and coupon issued per share dividend rate should be the same; any unit or individual to subscribe for shares, should pay the same price per share amounts.

    Chapter II exercise of shareholders rights

    Eighth issue preferred shares of the company in addition to the guidance of the State Council concerning the pilot preferred shares outside the relevant provisions of the Constitution, should also be in accordance with this approach in the regulation clearly preferred shareholders in the relevant rights and obligations.

    Nineth preferred shareholders in accordance with the agreed dividend yield dividends later, right along with common shareholders to participate in the remaining profit distribution, articles should be clearly preferred shareholders to participate in distribution of profits remaining proportion, condition, etc. Tenth to appear one of the following conditions, convening of the shareholders ' meeting shall notify the shareholders of the company, and in accordance with the law and the notification procedures set forth common shareholders in the articles.

Preference shareholders are entitled to attend the shareholders ' meeting, with the classification of common shareholders to vote on the following matters, each of its preferred shares have one vote, but holders of preference shares without voting rights:

(A) modify the content related to preferred stock in the company's articles;

(B) a cumulative reduction of registered capital of the company or more than 10%;

(C) the merger, Division, dissolution or transformation of the company;

(D) the issuance of preferred stock;

(E) other circumstances as specified in the articles.

    Resolution of the above issues, in addition to the common shareholders at the meeting (including the right to vote restored preferred shareholders) two-thirds per cent of the voting rights held by other than by, and subject to the preference shareholders attended the meeting (without the right to vote restored preferred shareholders) voting rights held by at least two-thirds. 11th general meeting of the company may authorize the Board of Directors according to the articles of incorporation of the company agreed to pay dividends to preferred shares.

Total three year or two consecutive fiscal years does not pay dividends, shareholders ' approval had not been agreed distribution programme the next day, preferred shareholders are entitled to attend the general meeting of shareholders together with the common shareholders vote per share for preferred shares prescribed in the articles of a certain percentage of voting rights. For the preferred stock dividends to accumulate to the next fiscal year, owed by the right to vote restored until the company paid dividends. Cumulative preferred stock is not available for dividends, voting rights restored until the company paid dividend that year.

    Company's articles of association may provide that preferred shares the right to vote restored in other circumstances.

    12th preference shareholders have the right to check out articles, shareholders, company bonds, shareholders ' meeting minutes, Board meeting resolutions, resolutions of the Supervisory Board, financial and accounting reports. 13th issuers to buy back preferred shares include the issuer to redeem preferred stock and investors demanding back preferred shares in two situations, and should be in the articles of incorporation and the specific conditions stipulated in the offer documents. Of the issuer to redeem preferred stock, dividends owed must be paid completely, but except for commercial banks to issue preferred stock to replenish capital.

    Corresponding write-down after preferred stock buy-back shares preferred shares total. 14th company directors, supervisors, senior management should be declared to the company holding the company's preferred stock and their changes over time, for the duration of the annual transfer of shares shall not exceed the total number of the company's preferred shares held by 25%.

    Articles on directors, supervisors and senior managers to transfer their preferred shares of the company held by other restrictions.

    15th article in addition to the State Council concerning the pilot preferred stock under the guidance of things, shareholders and shareholding ratio is calculated to calculate common stock and preferred shares, respectively.

    16th preferred a fixed dividend rate stipulated in the articles section, you can adopt the same fixed dividend rate preferred stock during their existence, or clear an annual fixed dividend rate, annual dividend yield can be different; floating dividend rate preferred shares set forth in the company's articles, should be clearly preferred duration calculation method of nominal dividend yield.

    Chapter three listed companies issue preferred shares

    Section I General provisions

    17th listed companies shall, and controlling shareholders or actual control of separate personnel, assets, financial organisations and operational independence.

    Article 18th sound system of internal control of listed companies, can effectively guarantee the company efficiency, legal compliance and reliability of financial reporting, internal control mechanisms shall be free from material defects.

    19th issue preferred shares of listed companies, the most recent three fiscal years achieving average annual distributable profits shall be not less than preferred stock dividend a year.

    Article 20th last three years cash dividends of listed companies should comply with the company regulations and relevant regulations of the China Securities Regulatory Commission. Article 21st report there is no significant accounting irregularities of listed companies.

    Public issued preferred stock, recently three years financial report was registered Accountants issued of audit report should for standard audit report or with stressed matters paragraph of no retained views of audit report; non-public issued preferred stock, recently one years financial report was registered Accountants issued of audit report for non-standard audit report of, by involved matters on company no major adverse effect or in issued Qian major adverse effect has elimination.

22nd use should be clearly listed companies issue preferred stock to raise funds, matched with the company's business scope, scale of operation, raise funds to use in line with State industrial policies and related environmental protection, land management and other provisions of laws and administrative regulations.

    Among financial companies, and this project must not be held to raise funds for trading financial assets and available-for-sale financial assets, lends financial investments shall not directly or indirectly invest in the trading of securities as the main business of the company.

    23rd listed company issued preferred shares shall not exceed the total number of shares of common stock of the company 50%, and the amount shall not exceed the net prior to release 50%, repurchase, conversion of the preferred stock is not included in the calculation. Article 24th with the issue of preferred shares of listed companies, the terms should be the same.

    Preferred shares issued before the completion, shall not issue preferred shares.

25th listed company of one of the following circumstances exists shall not issue preferred shares:

(A) the issuance application file any false record, misleading statement or material omission;

(B) within the last 12 months have been the China Securities Regulatory Commission administrative penalty;

(C) for alleged crimes by judicial organs investigation or suspected violation investigation by China Securities Regulatory Commission;

(D) the interests of listed companies are controlling shareholders or actual control of serious injury and has not been eliminated;

(E) the violations listed company and its subsidiary companies providing guarantees and has not been discharged;

(Vi) there could seriously affect the going concern of the company guarantee market seriously doubted, litigation, arbitration, or other matters of importance;

(G) its directors and officers are not in line with laws, administrative regulations, and rules and regulations of the qualification; 

    (VIII) other serious harm to the interests of investors and the public interest.

    Section II special provisions for public offerings of

Article 26th public offering of preferred shares of listed companies should conform to one of the following situations:

(A) of its common stock for the SSE 50 index shares;

(B) of the public offering of preferred shares as payment for acquisitions or a merger of other listed companies;

(C) to reduce the registered capital for the purpose of repurchase common stock, publicly issue preferred shares as a means of payment or upon completion of the buyback programme, publicly issue up to buy back preferred shares of the total reduction.

    Approved by the China Securities Regulatory Commission after the public offering of preferred shares are no longer subject to this section, (a), a listed company may implement this issue. 27th listed companies for the last three consecutive fiscal year should be profitable.

    After deducting the non-recurring profit and loss net profit compared with a net profit before the deduction, as calculated on the basis of the lower.

28th public offering of preferred shares of listed companies should be in the company's articles of association the following items:

(A) a fixed dividend rate;

(B) in the case of distribution of after-tax profits to the shareholders dividends;

(C) has not distributed dividends to preferred shareholders in full the difference shall accumulate to the next fiscal year;

(D) preferred stock dividend rate as agreed after the dividend, along with common shareholders no longer participate in the remaining profits.

    Commercial banks to issue preferred stock to replenish capital, subsections (b) and (c) otherwise.
29th public offering of preferred shares of the listed company, priority placement to former shareholders.

    Apart from the provisions of the present article 25th, 30th article, a listed company in the last 36 months for violation of industry and commerce, tax, land and environmental protection, customs laws, administrative regulations or rules, subject to administrative penalties and the circumstances are serious, shall not be publicly issued preferred shares. 

    31st public offering of preferred shares of listed companies, company and its controlling shareholder or the actual controller should be within the last 12 months there was no violation of behavior made public commitments to investors.

    Section III other provisions

Article 32nd preferred shares, par value of 100 yuan per share.

Preferred stock dividend issue price and coupon rate shall be fair and reasonable and shall not harm the legitimate interests of the shareholders or other stakeholders, the issue price shall not be less than par value preferred shares. Public offering of preferred stock dividend rates based on the market price or nominal quotation or other publicly recognized by the SFC determined.

    Non-public offering of preferred stock carries a dividend rate shall not be higher than the annual average of the last two fiscal years the weighted average return on equity. 33rd listed company shall not issue preferred shares that can be converted into common stock.

    But commercial banks according to the commercial bank capital regulation, private placement when the event is triggered mandatory conversion into common shares, preferred shares, and to comply with the relevant provisions.

34th listed company private placement of preferred stock issued only to qualified investors as provided herein, each issue must not exceed 200 people, and the same issue cumulative preferred stock shall not be more than 200 articles. 

    Issue for the foreign strategic investors, shall comply with the relevant departments under the State Council.

    Fourth quarter release procedures

35th listed companies issue preferred shares, the Board of Directors shall, according to the China Securities Regulatory Commission requirements for information disclosure, public disclosure of the preferred stock issuance plan, and shall be made in respect of the following resolutions, drew attention to the general meeting of shareholders for approval.

(A) the issuance of the preferred stock; (B) non-public offering of preferred stock and issue identified, listed companies signed with the corresponding issue of preferred stock subscription contract conditions in force. Subscription contract shall set forth the issue proposed subscription of preferred stock number, subscription pricing or pricing principle, determination of nominal dividend yield or its principles, as well as other essential terms.

Subscription contract shall stipulate the issue not be bidding to participate in the subscription, and the issuance of listed company Board of Directors, the approval of the general meeting of shareholders and approved by the China Securities Regulatory Commission, the contract shall enter into force;

(C) private placement of preferred shares, and the issue has not yet been determined, the resolution should include the issue of scope and eligibility, pricing policy, issue number or number range.

    Controlling shareholders and actual controllers of the listed companies or its affiliates involved in the subscription of private placement of preferred stock, in accordance with the preceding paragraph (b) to implement.

    Article 36th listed companies independent directors of listed companies should be issued this time specific views on the effects of all shareholders ' equity of the company, together with the resolution of the Board and disclosure.

37th general meeting of shareholders of listed companies to issue preferred stock consideration, should vote on the following item-by-item:

(A) the type and quantity of issued preferred stock;

(B) issuing mode, release the object and to the shareholders of the arrangement;

(C) the par value, issue price and its determining principle;

(D) the shareholders participate in the distribution of profits, including: nominal dividend yield or its principle, dividend payments conditions, dividend payments, dividends are cumulative, can participate in the remaining allocation of profits;

(E) the buy-back provisions, including buy-back conditions, duration, price, and principles, repurchase option exercise (if any);

(Vi) Fund-raising purposes;

(G) the company signed with the issue of preferred stock subscription contract conditions in force (if any);

(H) the resolution is valid;

(I) the regulations on preferred stock and common stock of the company profits, surplus property distribution, preferred stock voting rights restoration amendment of the relevant policy provisions;

(J) authorized on board to handle the issues of specific matters;

(11) other matters. The resolution, subject to the common shareholders attended the meeting (including the right to vote restored preferred shareholders) voting rights held by at least two-thirds. Preferred stock already issued, and subject to the preference shareholders attended the meeting (without the right to vote restored preferred shareholders) voting rights held by at least two-thirds.

    Listed companies issue preferred stock to the particular shareholder of the company and its affiliates, when shareholders vote on the proposal, affiliated shareholders should be avoided.

    Article 38th listed companies issue preferred stock shareholders ' meeting, shall provide an online poll, and by other methods approved by the China Securities Regulatory Commission to facilitate the shareholders to participate in general meeting of shareholders. 39th listed companies issue preferred shares should be owned by sponsor and sponsor report to the CSRC, its application, review, approval, distribution and other related procedures refer to the securities of listed companies to issue regulations and the provisions of the administration of securities issuance and underwriting approach.

    Porc, pursuant to the issuance examination Committee of China Securities Regulatory Commission methods of the special procedures, applications for issuance of audit. 40th issue preferred shares of listed companies, can apply for a approval, issue, different issues of preferred shares, in addition to nominal dividend rate, other articles should be the same. From the date of issue approved by the China Securities Regulatory Commission, the company issued should be implemented for the first time in six months, the remaining quantity shall be issued within 24 months is complete. More than the approved length of file and required to apply for CSRC approval again.

    First issued shall be issued not less than the total number of 50%, remaining the number issued by the company itself determines, within five working days after the completion of each issue reported that the China Securities Regulatory Commission for the record.

    Fourth chapter non-listed public company non-public offering of preferred shares

41st non-public offering of preferred shares of an unlisted public company shall meet the following conditions:

(A) legal regulations;

(B) corporate governance mechanism;

    (C) to perform their duty to disclose the information.

    42nd non-public offering of preferred shares of an unlisted public company shall abide by the present article 23rd, 24th, 25th, 32nd, 33rd, the provisions of articles.

    43rd unlisted public company private placement of preferred stock issued only to qualified investors as provided herein, each issue must not exceed 200 people, and the same issue cumulative preferred stock shall not be more than 200 articles.

44th intends to issue preferred shares of an unlisted public company, the Board shall by law on specific programmes, the distribution to the company shareholders ' equity effect, issued preferred stocks, mobilization of financial resources for the purposes of use and other matters must be clarified to make resolutions, and drew attention to the general meeting of shareholders for approval. Resolution of the Board to determine the specific issue, resolutions of the Board shall determine the distribution of the specific object name and its subscription price or price, subscription number or number range, and should be held in the Board of Directors prior to issue shares in force signed a conditional contract.

    Not decided the issue of the resolution of the Board, Board resolution should be clearly targeted in scope and eligibility, pricing, and so on. 45th unlisted public company shareholders General Assembly deliberations on issuance of preferred stock, voting matters reference 37th implementation of these measures. Resolution issued preferred shares, subject to common shareholders at the meeting (including the right to vote restored preferred shareholders) voting rights held by at least two-thirds. Preferred stock already issued, and subject to the preference shareholders attended the meeting (without the right to vote restored preferred shareholders) voting rights held by at least two-thirds.

    Non-listed public companies issue preferred stock to the particular shareholder of the company and its affiliates, when shareholders vote on the proposal, affiliated shareholders shall withdraw, common shareholders of the company (excluding the right to vote restored preferred shareholders) except for fewer than 200 people.

    Article 46th unlisted public companies issue preferred stock, auditing (exemption), distribution and other related non-listed public company oversight procedures shall be in accordance with the regulations and other related regulations.

    The fifth chapter registration and settlement of transaction and

47th after the issuance of preferred shares can apply to traded or transferred is not restricted. Public offering of preferred shares can be traded on the stock exchange. Private placement of preferred shares in listed companies on the stock exchange transferred non-listed public company private placement of preferred stock in national SME transfer of share transfer system, transfers are limited to qualified investors.

    Transactions or transfers of specific measures by the stock exchange or national SME share transfer system separately.

    48th preferred stock transactions or transfers to investor suitability standards should be consistent with the release link; non-public offering the same terms after transactions or transfers, the preferred shares, investors must not exceed 200 people.

    49th China Securities Depository and Clearing Corporation preferred stock provides registration, custody, clearing, and settlement services.

    The sixth chapter information disclosure 50th company shall raise preferred shares in accordance with the relevant disclosure rules on the establishment of the CSRC statement or other disclosure document, perform his duty to disclose the information. Listed company information disclosure procedures and requirements refer to the securities of listed companies to issue regulations and detailed rules for the implementation of the non-public offering of shares of listed companies and the relevant regulatory requirements in the guidelines.

    Non-listed public company disclosure of non-public offering of preferred stock procedures and requirements in the light of the regulatory measures on non-listed public companies and relevant regulatory requirements in the guidelines.

    51st article issued preferred stock of company disclosure regularly report Shi, should to specifically chapters disclosure has issued preferred stock situation, and holds company priority unit shares up of Qian 10 name shareholders of list and holding amounts, and priority unit shareholders of profit distribution situation, and preferred stock of repo situation, and priority unit shareholders voting recovery and the exercise situation, and preferred stock accounting processing situation and the other and preferred stock about of situation, specific content and format by China SFC provides.
52nd issue preferred shares of listed companies, the right to vote restored, repurchase common stock and other matters, as well as other possible common stock or preferred stock transactions or transfer pricing matters have a greater impact, 67th listed companies shall, in accordance with the Securities Act, as well as relevant provisions of the China Securities Regulatory Commission, implementation of interim reports, notices and other information disclosure obligations.

    53rd unlisted public companies issue preferred shares in accordance with the measures for the supervision and administration of non-listed public company and relevant regulatory guidelines set out daily information disclosure obligations.

    The seventh chapter buybacks and m 54th non-public listed company can issue preferred shares as a means of payment to company specific shareholder to buy back common stock.

    Listed companies to buy back common stock prices should be fair and reasonable and shall not harm the legitimate interests of the shareholders or other stakeholders.

55th listed companies so as to reduce the registered capital for the purpose of repurchase common stock public offering of preferred stock, as well as in non-public offering of preferred stock as a means of payment to the company of certain shareholders to repurchase common stock, in addition shall comply with the conditions and procedures for issuing preferred shares should also comply with the following requirements:

(A) listed companies to buy back common stock should be approved by the Board of Directors in accordance with a resolution and submitted to the general meeting of shareholders; (B) the resolution of the general meeting of shareholders of listed companies to buy back shares, and shall include the following items: repurchase common stock price range and repurchase common stock number and percentage, term repurchase common stock, the validity of the resolution, to the Board of Directors to handle the specific authorization to repurchase shares, and other related matters.

To issue preferred shares as a means of payment, shall be intended to cover the total amount of preferred stock and payments; buy-back programme within one year from the date of completion of public offering of preferred stock, should include the repurchase of total funding, and sources of funding;

(C) by resolution at a general meeting of shareholders of listed companies to buy back common stock is subject to common shareholders at the meeting (including the right to vote restored preferred shareholders) voting rights held by at least two-thirds;

(D) shall be made at the general meeting of shareholders of listed companies to buy back shares following the announcement of the resolution the next day;

(E) inform the creditor in accordance with law;

    This solution has been provided, it shall comply with the China Securities Regulatory Commission for listed companies to buy back other provisions.

    56th listed company offer applies to all shareholders of the acquired company, but for a preferred stock shareholders and common shareholders put forward different conditions.

    57th-listed company in accordance with the provisions of the administrative measures for material asset reorganization of listed companies issue preferred stock to buy assets of the conditions, and shall comply with these measures 33rd and 35th to 38th of the rules, disclosure of the information in accordance with law, perform the corresponding procedure.

    Article 58th of listed companies issue preferred shares as a means of payment to purchase assets that can raise matching funds.

    59th issue preferred shares of an unlisted public company involved material asset reorganization, shall comply with the provisions relating to material asset reorganization of China Securities Regulatory Commission.

    Eighth regulatory measures and legal liability

    60th article company and holding shareholders or actual control people, company director, and prison thing, and senior management personnel and other directly responsibility personnel, related market intermediary institutions and the responsibility personnel, and preferred stock pilot of other market participants violation this approach provides of, in accordance with company law, and securities method and China SFC of about provides processing; suspected crime of, law transferred judicial organ, held its criminal.

    61st article listed company, and non-listed public company violation this approach provides, exists not by provides developed about articles terms, and not according to agreed convened shareholders Assembly recovery priority unit shareholders voting, damage priority unit shareholders and small shareholders interests, behavior of, China SFC should ordered corrected, on listed company, and non-listed public company and its directly is responsible for of competent personnel and other directly responsibility personnel, can take corresponding of administrative regulatory measures and warning, and 30,000 yuan following fine, administrative punishment.

    62nd listed companies in violation of the provisions of the second paragraph of this article 22nd, China Securities Regulatory Commission may order the correction, within 36 months and not accepting an application for the public offering of securities of the company.

    63rd listed company to this approach, non-listed public company investors other than qualified investors under non-public offering of preferred stock, the CSRC shall order correction, and in within 36 months from the date of confirmation does not accept an application for the issuance of preferred stock of the company.

    64th underwriter at the time of underwritten private placement of preferred stock, preferred placement to object under these procedures do not meet the qualified investors, China Securities Regulatory Commission may be ordered to correct, and if not accepted within 36 months of their participation in securities underwriting.

    Nineth chapter by-laws

65th qualified investors in these measures include:

(A) approval by the financial regulation of the financial institutions, including commercial banks, trust companies, securities companies, fund management companies and insurance companies;

(B) the above financial institutions offering financial products, products include, but are not limited to banking, trust, investment-linked insurance products, Fund, securities and asset management products;

(C) paid-up capital or total amount paid up share capital of not less than 5 million Yuan enterprises;

(D) paid the total registered capital of no less than 5 million yuan of partnership;

(E) qualified foreign institutional investors (QFII), RMB qualified foreign institutional investor (RQFII), in line with relevant departments under the State Council's foreign strategic investors;

(F) subject to issuer other than the directors and senior management personnel, their spouses, name in various types of securities accounts and capital accounts, asset management accounts with total assets of not less than 5 million Yuan, individual investors;

    (VII) other qualified investors recognized by the China Securities Regulatory Commission.

    66th non-listed company's initial public offering of common stock to the public and non-public offering of preferred stock, preferred shares issued and disclosure should be consistent with the approach of non-public offering of preferred shares of listed companies in the relevant provisions.

67th registered outside issue preferred shares of overseas listed companies in the territory shall conform to the relevant provisions of the floatation and listing abroad.

    Registered in the territory of overseas listed companies issue preferred stock, making reference to the way provision on non-listed public companies issue preferred stock, as well as the measures for the supervision and administration of non-listed public company and other related provisions of its preferred national SME share transfer system to transfer.

68th following terms used in these rules as follows:

(A) compulsory dividends: the company in the case of distribution of after-tax profits must be allocated to preferred shareholders dividends;

(B) the distributable profit: undistributed profit of the shareholders of the issuer shall have the;

(C) the weighted average return on equity: in accordance with the rules of information disclosure by public-offering companies compiling 9th--return on equity and earnings per share the calculation of the weighted average return on equity calculation and disclosure of;

    (D) the Shanghai 50 index: China Securities index co's Shanghai Stock 50 index.

    69th in this way when calculating the number of qualified investors, asset managers in their management of two or more products subscribed or the preferred shares, as a person. 70th these measures come into force on the date of promulgation.