In order to implement the requirements in the Implementation Opinions on Establishing Science and Technology Innovation Board and Piloting Registration-based IPO System on Shanghai Stock Exchange for formulating the system of reasonable shareholding reduction for the Science and Technology Innovation Board of the Shanghai Stock Exchange (SSE STAR Market), with the approval of the China Securities Regulatory Commission (CSRC), the SSE today released the Detailed Implementation Rules for Shareholders of Companies Listed on SSE STAR Market to Reduce Shareholding through Inquiry Transfer and Placement to Specific Institutional Investors (the Detailed Implementation Rules for short).
In the process of publicly soliciting opinions from the market, the institutional arrangements of the Detailed Implementation Rules were generally acknowledged, and it was believed that the relevant systems were in line with expectations, reflecting the goals and ideas for the reform of the registration-based IPO system, which was conducive to balancing the right of the pre-IPO shareholders to normally transfer shares and other investors’ trading right, and would help meet the demand of the innovation capital for withdrawal and introduce incremental funds for shareholding reduction. The SSE has carefully studied the opinions of the market participants on system improvement and fully absorbed the reasonable and feasible suggestions before making adjustments to the Detailed Implementation Rules in the following two aspects.
On the one hand, the inquiry transfer system has been improved. First of all, in order to adapt to the new Securities Law, the expression of "non-public transfer" in the consultation draft is adjusted to "inquiry transfer to specific institutional investors" (the "inquiry transfer" for short), so as to more accurately reflect the characteristics of the business and facilitate the understanding of market participants. Second, the processes of the inquiry transfer business are simplified, as the process of soliciting intentions of transfer and the corresponding requirement for information disclosure are cancelled, so as to improve the transfer efficiency. Third, the measures for guaranteeing implementation are added, as it is required that the transferors should declare and lock up the volume of the shares to be transferred, and the transferees should not give up the subscription without justified reasons. In addition, institutional space has also been reserved for the mid-and-long-term funds to participate in the transfer.
On the other hand, the placement-based shareholding reduction system has been refined. First of all, the range of placement participants has been set, as the shareholders participating in the placement should make the placement to the shareholders of the companies listed on the SSE STAR Market who are registered on the date of record, which will be disclosed in the announcement on the placement plan. Second, the mode of subscription has been specified, as the placement participants planning to subscribe for the shares should conduct the subscription via the SSE system on the 5th trading day after the date of record. Third, the way to deal with insufficient subscription has been clarified, as the shareholders participating in the placement shall sell in proportions if the shares are not fully subscribed for. Fourthly, the market expectation has been stabilized, as the shareholders participating in the placement shall apply to lock up the volume of the shares to be placed, and promise to have adequate shares available for the placement; in addition, there is an extra requirement for disclosing the proportions of the placement right.
The issuance of the Detailed Implementation Rules is an important measure to deepen and advance the reform of the registration-based IPO system on the SSE STAR Market, and aims to improve the shareholding reduction system of the SSE STAR Market in a market-based way. After the release of the Detailed Implementation Rules, the SSE will work with the China Securities Depository and Clearing Co., Ltd. and relevant market entities to make adequate preparations for the launch of the business and organize themed trainings, so as to ensure the smooth implementation of the system innovation. At the same time, the SSE will continue to evaluate the effect of implementation of the shareholding reduction system for the SSE STAR Market, and strive to make more reasonable institutional arrangements for shareholding reduction.