Provisions on Strategic Investment by Foreign Investors in Listed Companies — Full English Translation (2024 Revision)

Table of Contents

Chapter I — General Provisions

Article 1 — These Provisions are formulated in accordance with the Securities Law of the People’s Republic of China, the Foreign Investment Law of the People’s Republic of China, the Company Law of the People’s Republic of China, and other relevant laws and administrative regulations, for the purposes of further opening up the securities market, regulating the strategic investment by foreign investors in listed companies, promoting the healthy and stable development of the capital market, and protecting the lawful rights and interests of investors.

Article 2 — For the purposes of these Provisions, “strategic investment by foreign investors in listed companies” (hereinafter referred to as “strategic investment”) means the acquisition by foreign investors, through agreement transfer, private placement by listed companies, tender offer or other methods permitted by laws and regulations, of shares of A-share listed companies and medium- to long-term strategic placement and holding thereof.

Article 3 — Strategic investment shall comply with the provisions of the State on foreign investment access, and shall not fall within the prohibited category under the Special Administrative Measures (Negative List) for Foreign Investment Access.

Article 4 — Strategic investment shall comply with the provisions of laws and administrative regulations on national security review, antitrust review, and other relevant reviews.

Article 5 — Strategic investment shall adhere to the principles of openness, fairness and impartiality, safeguard national security and the public interest, and shall not harm the lawful rights and interests of listed companies and their shareholders.

Chapter II — Conditions and Procedures for Strategic Investment

Article 6 — Foreign investors conducting strategic investment shall meet the following conditions:

(1) Being legally established and in good standing, with a sound governance structure and internal control system, and having no record of major violations of laws and regulations in the past three years;

(2) The foreign investor or its actual controller having total assets abroad of not less than USD 50 million or total assets under management of not less than USD 300 million;

(3) Having a sound business reputation and financial credit standing, and having no record of major violations of Chinese laws or regulations; and

(4) Other conditions as prescribed by laws, administrative regulations, and the provisions of the securities regulatory authority of the State Council.

Article 7 — Foreign investors conducting strategic investment may do so through the following means:

(1) Acquiring shares of listed companies by agreement transfer;

(2) Subscribing for shares issued by listed companies through private placement;

(3) Acquiring shares of listed companies by tender offer; or

(4) Other methods permitted by laws and regulations.

Article 8 — The shares acquired by foreign investors through strategic investment shall be subject to a lock-up period of not less than 12 months. Where laws, administrative regulations or the provisions of the securities regulatory authority of the State Council provide for a longer lock-up period, such provisions shall prevail.

Article 9 — Where a foreign investor acquires or actually holds 5 percent or more of the shares of a listed company, the foreign investor shall fulfill its reporting and announcement obligations in accordance with the relevant provisions.

Article 10 — Where a foreign investor acquires or actually holds 30 percent or more of the shares of a listed company and continues to acquire shares, it shall make a tender offer to all shareholders of the listed company in accordance with the law, except where exempted by the securities regulatory authority of the State Council.

Article 11 — Strategic investment shall not result in the foreign investor actually controlling the listed company where such control would endanger national security, or involve industries where foreign investors are prohibited from acquiring control under the Negative List for Foreign Investment.

Chapter III — Administration of Strategic Investment

Article 12 — Before conducting strategic investment, foreign investors shall complete foreign investment information reporting in accordance with the relevant provisions, and shall go through the relevant registration or filing procedures with the securities registration and clearing institution and the stock exchange.

Article 13 — The securities registration and clearing institution shall, in accordance with the relevant provisions, handle securities registration for strategic investment. Where a foreign investor settles transactions in renminbi, it shall comply with the relevant provisions on the administration of renminbi accounts.

Article 14 — Foreign investors may use legally held foreign currencies or offshore renminbi, or renminbi legally obtained within the territory of China for strategic investment. Foreign exchange settlement and sale involved in strategic investment shall be handled in accordance with the relevant provisions on foreign exchange administration.

Article 15 — Where a foreign investor transfers the shares of a listed company that it holds through strategic investment, it shall comply with the provisions on the lock-up period and the relevant provisions on foreign exchange administration, tax administration, and securities registration.

Article 16 — Where a foreign investor reduces its shareholding in a listed company resulting in the loss of its status as a strategic investor, it shall handle the relevant formalities with the securities registration and clearing institution in accordance with the relevant provisions.

Chapter IV — Information Disclosure and Ongoing Obligations

Article 17 — Foreign investors and listed companies shall, in accordance with the provisions of the securities regulatory authority of the State Council and the stock exchange, perform their information disclosure obligations, and the information disclosed shall be truthful, accurate and complete, and shall not contain any false representations, misleading statements or material omissions.

Article 18 — Listed companies shall, in their periodic reports, disclose changes in the shareholdings of foreign investors and other matters relating to strategic investment.

Article 19 — Where any material change occurs in the situation of a foreign investor that may affect the strategic investment, such as a change in actual control, merger or division, suspension or dissolution, or entry into bankruptcy proceedings, the foreign investor shall promptly notify the listed company, and the listed company shall make an announcement in accordance with the provisions.

Article 20 — Foreign investors shall comply with the articles of association and internal rules of the listed company, exercise their shareholders’ rights in good faith, and shall not abuse their shareholders’ rights to harm the interests of the company or other shareholders.

Chapter V — Supervision and Administration

Article 21 — The Ministry of Commerce (MOFCOM) shall, in accordance with the Foreign Investment Law and other relevant laws and regulations, supervise and administer strategic investment by foreign investors.

Article 22 — The securities regulatory authority of the State Council shall, in accordance with the law, supervise and administer securities trading activities involved in strategic investment.

Article 23 — The foreign exchange administration authority shall, in accordance with the law, supervise and administer the cross-border flow of foreign exchange funds involved in strategic investment.

Article 24 — The relevant departments of the State Council shall, in accordance with their respective duties, strengthen communication and coordination and establish a mechanism for sharing regulatory information to promptly identify, prevent and address risks in strategic investment.

Article 25 — Stock exchanges and securities registration and clearing institutions shall, in accordance with the provisions, exercise self-regulatory administration over the matters relating to strategic investment and shall promptly report any abnormalities discovered to the securities regulatory authority of the State Council.

Chapter VI — Legal Liability

Article 26 — Where a foreign investor or a listed company violates the provisions of these Provisions on information disclosure by failing to make disclosures in accordance with the provisions or by making disclosures containing false representations, misleading statements or material omissions, it shall be dealt with by the securities regulatory authority in accordance with the Securities Law and other relevant laws and regulations.

Article 27 — Where a foreign investor violates the lock-up period provisions or other trading restrictions by transferring shares or reducing its shareholding, the securities regulatory authority shall order it to make corrections and impose penalties in accordance with the law; where unlawful gains have been made, they shall be confiscated.

Article 28 — Where a foreign investor conducts strategic investment without completing the formalities such as foreign investment information reporting, or commits fraud in the reporting, the relevant authorities shall order it to make corrections and may impose penalties in accordance with the relevant provisions.

Article 29 — Where a foreign investor, in conducting strategic investment, fails to fulfill its obligations under national security review, anti-monopoly review, or other relevant reviews, resulting in consequences that endanger national security or the public interest, the relevant authorities shall take measures in accordance with the law to eliminate the impact, and pursue legal liability in accordance with the law.

Article 30 — Where a foreign investor, in conducting strategic investment, obtains funds through illegal channels or violates the provisions on foreign exchange administration, the foreign exchange administration authority shall impose penalties in accordance with the law; where a crime is constituted, criminal liability shall be pursued in accordance with the law.

Chapter VII — Supplementary Provisions

Article 31 — These Provisions shall apply to strategic investment in companies listed on the Beijing Stock Exchange, with necessary adjustments to be made in light of the actual circumstances.

Article 32 — The strategic investment in listed companies by investors from Hong Kong Special Administrative Region, Macao Special Administrative Region and the Taiwan region shall be governed by these Provisions by reference.

Article 33 — The strategic investment in listed companies by foreign-invested enterprises lawfully established within the territory of China shall be governed by these Provisions by reference.

Article 34 — Where strategic investment involves matters for which these Provisions do not provide, the relevant laws, administrative regulations and the provisions of the securities regulatory authority of the State Council shall apply.

Article 35 — The Ministry of Commerce and the securities regulatory authority of the State Council shall be responsible for the interpretation of these Provisions.

Article 36 — These Provisions shall take effect on December 2, 2024. The Measures for the Administration of Strategic Investment in Listed Companies by Foreign Investors, promulgated on December 31, 2005, shall be repealed simultaneously.