China Lifts Ban on Transfer of State-owned, Corporate Shares to Overseas Investors

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Last updated at: (Beijing Time) Monday, November 04, 2002

China Lifts Ban on Transfer of State-owned, Corporate Shares to Overseas Investors

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China has lifted a ban on the transfer of state-owned and corporate shares of listed firms to investors from overseas.

A recent circular sets out regulations governing the resumption of share transfers, which were suspended back in 1995 due to the lack of laws and regulations at the time.

The circular was issued jointly by the China Securities Regulatory Commission, the Ministry of Finance, and the State Economic and Trade Commission with the approval of the State Council, China's central government.

The circular stipulates that the transfer must comply with the requirements set out in the catalogue on industry guidelines for foreign investment in China.

Under the circular, shares relating to industries or type of business where foreign investment is forbidden should not be transferred to overseas investors.

In areas where the Chinese side is required to have controlling shares, it should retain a controlling position after some shares are transferred to overseas investors, according to the circular.

Moreover, the share transaction must be approved by the State Economic and Trade Commission if it involves industrial policies and corporate restructuring.

Approval from the Ministry of Finance is needed if the share deals involve the management of State-owned shares.

The circular also stipulates that the share transfer should conform with the regulations issued by the China Securities Regulatory Commission on purchase of shares of listed companies and information disclosure.

State-owned and corporate shares, in principle, would be transferred to overseas investors through public bidding, said the circular.

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