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China to Lower Threshold for Listing
China will cut requirements on enterprises for going public in amending its securities law, which will offer listing opportunities to a large number of enterprises, revealed a senior official with the Sate Economic and Trade Commission on Monday.
He disclosed the precondition for firms to make profit for three consecutive years will be changed into "make profit for three accumulative years".
Other changes include lowering threshold for corporate establishment, for example, to reduce the required registered capital from 300, 000 yuan to 100, 000 yuan, or to replace the contributed capital system with the authorized capital system and require a paid-in capital that only represents 30 percent to 40 percent of the registered capital.
The revised securities law will strengthen incentive and control mechanism, promote stock option system and allow shares held by the management to be tradable at appropriate time, he said.
According to him, amendment will also be made to reduce the cost for shareholding transformation, such as revising stipulations that multiplex companies shall not establish wholly owned subsidiaries and the proportion of foreign investment shall not exceed 50 percent of the total assets, and cutting the 90-day period for enterprises division, merger and buy-back of shares.
When talking about the exit channel for state capital, he said this will be conducted by listed companies, mainly in the form of contract transfer, placement and buy-back. Other ways will also be considered, he added. One is issuance of the inventory, as tried by CNOOC and Sinopec, and the other is to entrust the state capital to fund management companies, he said.
Source: Panorama
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