Interim Provisions on Strengthening the Supervision of the Abnormal Trading of Stocks Relating to Significant Asset Restructuring of Listed Companies (Revised in 2016)

　　Order of the China Securities Regulatory Commission [2016] No.16

　　September 9, 2016

　　(Issued on November 6, 2012; revised according to the Decision on Revising the Interim Provisions on Strengthening the Supervision of the Abnormal Trading of Stocks relating to Material Asset Reorganization of Listed Companies)

　　Article 1 These Provisions are enacted for the purpose of strengthening the supervision on the abnormal trading of stocks relating to significant asset restructuring by listed companies, preventing, controlling and striking at the insider trading, safeguarding the order of securities market, and protecting the legitimate rights and interests of the investors, in accordance with the Securities Law of the People's Republic of China, the Administrative License Law of the People's Republic of China, the Circular of the General Office of the State Council on Forwarding the Opinions of the China Securities Regulatory Commission and Other Departments on Striking at, Preventing and Controlling Insider Trading on the Capital Market in Accordance with Law, the Administrative Measures for the Information Disclosure of Listed Companies and the Administrative Measures for the Significant Asset Restructuring by Listed Companies.

　　Article 2 Listed Companies and trading counterparties as well as their controlling shareholders, actual controllers, securities companies and securities service institutions that provide services for the significant asset restructuring and other subjects involved in the significant asset restructuring shall, in strict accordance with the provisions of applicable laws, administrative regulations and rules, complete the management of the information of significant asset restructuring and registration of insiders and increase the awareness of confidentiality.

　　Article 3 The listed companies and their controlling shareholders, actual controllers and other relevant persons shall conduct research, planning, decision making and other matters relating to significant asset restructuring of listed companies after the suspension of the trading of stocks involved or at non-trading time in general, and shall simplify the decision-making process, increase the decision-making efficiency, shorten the decision-making time limit, and manage to narrow the scope of insiders. Any policy consultation and proposal discussion with competent authorities required shall be conducted after suspension of trading of the stocks involved.
　　The controlling shareholders, actual controllers of listed companies and parties concerned shall report relevant information to listed companies in a timely and active manner, and cooperate with listed companies to conduct the suspension of trading of stocks and the disclosure of information.

　　Article 4 Listed companies shall make application to stock exchange for suspension of trading of stocks immediately when parties concerned reach the preliminary substantive intent for the significant asset restructuring or, the substantive intent is failed to be reached but such information is predicted to be hard keep confidential, and conduct information disclosure in stages in an accurate, correct, complete, timely and equal manner to disclose the risks sufficiently.

　　Article 5 After listed companies are suspended from trading their stocks for significant asset restructuring, the stock exchange shall initiate immediately review process for trading of stocks in the secondary market and conduct continuous supervision on the trading of stocks in the secondary market in all subsequent stages.

　　Article 6 After the listed companies file applications to China Securities Regulatory Commission (the "CSRC") for administrative permit for significant asset restructuring, if such significant asset restructuring is suspected of insider trading and is under the investigation by China Securities Regulatory Commission or judicial authorities and such applications have not been accepted yet, the CSRC shall not accept such applications; if such applications have been accepted, CSRC shall suspend the review of such applications.

　　Article 7 For the applications for administrative permit not accepted or suspended for review for the reasons of the provisions specified in Article 6 hereof, if following conditions are satisfied, CSRS shall resume the acceptance procedures for the applications not accepted, or resume the review procedures for the applications suspended for review;
　　1. The CSRC or judicial authorities find after investigation and verification that the listed companies, the trade counterparties sharing more than 20% of the total transaction amount of the restructuring (if several transaction counterparties are involved in the violation, the transaction amount shall be combined for calculation) and the controlling shareholders, actual controllers of above mentioned subjects as their controlling institutions conduct insider trading.
　　2. After investigation and verification, CSRC or judicial authorities find that there is no insider trading conducted by the directors, supervisors, senior officers of listed companies, the directors, supervisors and senior officers of the controlling shareholders and actual controllers of the listed companies, the directors, supervisors and senior officers of the transaction counterparties, the transaction counterparties counting 20% or less of the transaction amount of the restructuring and their controlling shareholders, actual controllers and institutions controlled by above mentioned subjects, securities companies, securities service institutions providing service for the restructuring and their operators, and other subjects participating in the significant asset restructuring; or although above mentioned subjects are suspected of insider trading, they have been replaced or exited the transaction of the significant asset restructuring;
　　3. The matters under investigation do not concern the subjects listed in Items (1) and (2) of this Article. Where the financial consultant is replaced pursuant to provisions of Item (2) of preceding paragraph, the listed company shall withdraw the original administrative permit application for significant asset restructuring and file another application to the China Securities Regulatory Commission. Where the listed company makes adjustments on trading target, trading subject matter, etc. which leads to significant adjustments of the significant asset restructuring, the decision-making procedures shall be proceeded again.

　　Article 8 CSRC shall resume the acceptance or review of the rejected or suspended applications for administrative permit for significant asset restructuring of listed companies if confirming that such rejected or suspended applications are satisfactory to the conditions as stipulated in Article 7 hereof based upon the information mastered during discharging its duties.
　　If the listed company presents evidence to prove that its application for administrative permit for significant asset restructuring satisfies conditions mentioned in Article 7 hereof, the listed company may submit to the CSRC a application for resumption of acceptance or review after the financial consultant and law firm retained by such company conduct the due diligence on the subjects involved in the significant asset restructuring and issue affirmative opinions. CSRC may, based upon the information mastered during discharging its duties, decide to resume the acceptance or review or not.

　　Article 9 If there are great market query for the significant asset restructuring or there are reports with express clues, the listed company and institutions and personnel involved shall make the statements or clarify for such market query in timely manner; CSRC shall examine and verify such reports. Where the items with suspect of insider trading of great market query or report are already under the investigation for filing a case by the China Securities Regulatory Commission or under the investigation for hearing a case by the judicial authorities, provisions of Article 6 through Article 8 hereof shall be required for implementation.

　　Article 10 After the CSRC accepts the application for administrative permit, if the subjects as listed in Item (1) of Paragraph 1 of Article 7 hereof are imposed by the CSRC with administrative penalty or under investigation against criminal liability by judicial authorities on the grounds of insider trading relating to the significant asset restructuring, the CSRC shall terminate the review and return the application materials for administrative permit to the applicant or the independent financial consultant retained by the applicant.

　　Article 11 If the application for administrative permit of significant asset restructuring is under the process of refusal to accept, resumption of acceptance, suspension of review, resumption of review or termination of review by the CSRC, the listed company shall make timely announcements and disclosure of risks.

　　Article 12 If a listed company terminates the process of the material asset reorganization initially upon disclosure of the plan or draft in respect of the material asset reorganization, the listed company shall undertake simultaneously not to plan a material asset reorganization again at least within one month from the day of announcement and disclose the same.
　　If the application for administrative permit of the material asset reorganization is terminated by the China Securities Regulatory Commission pursuant to provisions of Article 10 hereof on the grounds that the controlling shareholders of the listed company and actual controllers thereof commit the act of insider trading, the listed company shall simultaneously undertake not to plan a material asset reorganization again within 12 months from the day of announcement and disclose the same.

　　Article 13 If the subjects listed in Article 7 hereof are suspected of insider trading relating to the significant asset restructuring and are under investigation for filing a case or hearing the case of insider trading, such subjects shall not participate in the significant asset restructuring of any listed companies from the day of filing the case to the day of affirmation of the liabilities. If the CSRC imposes administrative penalty or the judicial authorities conducts investigation on the criminal liabilities against such subjects, such subjects shall not participate in the significant asset restructuring of any listed companies at least within 36 months from the day of the granting of the administrative penalty by the CSRC or from the effective day of the relevant adjudications by the judicial authorities.

　　Article 14 Listed companies and their controlling shareholders, actual controllers, transaction counterparties concerned, securities companies and securities service institutions, and other information disclosure obligators shall cooperate with the China Securities Regulatory Commission to conduct the regulation or enforce the law. If such institutions refuse to cooperate, the CSRC may take supervision measures in accordance with the law and publicize the information about the implementation of such supervision measures.

　　Article 15 The matters concerning the administrative permit for consolidation and split-up of listed companies may be solved by reference to these Provisions.

　　Article 16 These Provisions shall come into force as of December 17, 2012.