China tightens rules on large shareholders selling shares

China tightens rules on large shareholders selling shares

The tightening of rules on large shareholders selling shares on the A-share market has taken effect on Tuesday, as part of the nation's intensified efforts to protect the legitimate rights of small investors and boost their confidence.

China's stock exchanges in Shanghai, Shenzhen and Beijing all issued detailed rules on Tuesday evening to better regulate large shareholders selling their shares in listed firms, taking effect immediately.

When the company's stock price falls below its IPO price or net asset value per share, it came after the China Securities Regulatory Commission said on August 27 that the controlling shareholder or actual controller of a listed company cannot reduce their holdings via the secondary market.

The three stock exchanges also said on Tuesday that large shareholders' holding reductions are prohibited if the closing stock price in any of the 20 trading days before the company discloses the holding reduction plan is either lower than the IPO price or lower than the net asset value per share reported at the end of the most recent fiscal year or the most recent financial accounting reporting period.

The Shanghai and Shenzhen exchanges said holding reduction is also prohibited when the company has not distributed any cash dividends or distributed cash dividends less than 30 percent of the average annual net profits during the period. fiscal years when the company reported negative net profits are not included in the calculation.