Circular on Printing and Distributing the Guiding Opinions on Actively Absorbing Private Investment during State-owned Enterprise Restructuring

Guo Zi Fa Chan Quan [2012] No. 80

May 23, 2012

All central enterprises, and the state-owned assets supervision and administration commissions of all provinces, autonomous regions, municipality directly under the Central Government, cities specifically designated in the state plan and the Xinjiang Production and Construction Corp,

For the purpose of implementing the principles of the Key Work Points of the Opinions of the State Council on Encouraging and Guiding the Healthy Development of Private Investment (Guo Fa [2010] No. 13) and the Circular of the General Office of the State Council on Division of Important Work in Encouraging and Guiding Healthy Development of Private Investment (Guo Ban Han [2010] No. 120) and proactively guiding and encouraging the private investment in State-owned Enterprise (SOE) restructuring, our relevant departments have deliberated and enacted the Guiding Opinions on Actively Absorbing Private Investment during SOE Restructuring which is hereby printed and distributed to you. Please fully abide.

Guiding Opinions on Actively Absorbing Private Investment during SOE Restructuring

For the purpose of carrying out the principles of the Key Work Points of the Opinions of the State Council on Encouraging and Guiding the Healthy Development of Private Investment (Guo Fa [2010] No. 13) and the Circular of the General Office of the State Council on the Division of Key Working Points in Encouraging and Guiding the Healthy Development of Private Investment (Guo Ban Han [2010] No. 120) and proactively promoting the participation of private investment in SOE restructuring, the opinions are given as follows:

I. We should unwaveringly consolidate and develop the public sector of the economy and encourage, support and guide the development of non-public sectors of the economy, further promote the strategic adjustment of state-owned sector of the economy and improve the reasonable flow mechanism of advancing and retreating of state-owned capital.

II. We should actively guide private capital to invest in SOE restructuring to develop a mixed sector of the economy, establish modern property system and further promote SOEs to transform their operating mechanism and development pattern.

III. The absorption of private investment in SOE reform and restructuring shall comply with the national overall requirements and the relevant provisions on the layout of state-owned sector and the structural adjustment, follow market rules, respect the willingness of enterprises and protect the lawful rights and interests of relevant participants.

IV. During the absorption of private investment in SOE reform and restructuring, SOEs shall widely release the information relating to the intention of absorbing private investment through property rights market, media and internet.

V. During the absorption of private investment in SOE reform and restructuring, priority shall be given to the private investors that have good performance and reputation and have common goals with the SOEs.

VI. To participate in SOE reform and restructuring, private investors may make monetary investment, or through other ways of capital contribution that are permitted by the laws and administrative regulations, such as capital contribution in kind, intellectual property rights and land use rights.

VII. Investors may participate in SOE reform and restructuring through equity acquisition, direct investment, acquisition of convertible bonds, lease financing and other means.

VIII. The private investors may, among themselves or together with the SOEs, jointly establish equity investment funds to participate in SOE reform and restructuring, jointly invest in strategic and emerging industries and develop overseas investment.

IX. Private investment shall be absorbed during the SOE restructuring and listing or the additional stock issuance by the listed companies held by SOEs. The transfer of the SOE shareholder's equity in a listed company by way of public collection or bulk trading shall not impose additional conditions particularly towards private investors on the qualification of the assignee.

X. Unless otherwise permitted to transfer by agreement as specified in the relevant national provisions, the transfer of state-owned property of an enterprise shall go through public bidding procedure on a property right market selected and confirmed by the state-owned assets supervision and administration authorities, and shall not impose additional conditions particularly towards private investors on the qualification of the assignee.

XI. A property right trading organization engaging in the transfer of state-owned property rights shall fully utilize the function of the market in resource allocation, gather and structure private capital in an appropriate order and participate in the transfer of the state-owned property rights of enterprises.

XII. The absorption of private investment in SOE reform and restructuring shall comply with the relevant national laws and administrative regulations, the supervision system of state-owned assets and the articles of association of enterprises. Resolution procedure shall be carried out according to the law to protect the rights and interests of capital contributors.

XIII. During the absorption of private investment in its reform and restructuring, SOEs shall go through the procedure of enterprise reform and restructuring in a democratic way in accordance with the regulations, prescribe practical and enforceable plan according to the law to settle the employees in an appropriate manner, make efforts to the succession and transfer of labor contracts and social insurance relationship, and repay the debts owed to employees to protect the lawful rights and interests of employees and the stability of enterprises and society.

XIV. A restructured enterprise shall succeed the creditors' rights and debts of the former enterprise to safeguard the social credit order and protect the lawful rights and interests of financial creditors and other creditors.