In a significant move to attract more foreign capital, Chinese authorities on Friday unveiled revised rules easing restrictions on foreign investors’ strategic investments in listed companies. The new measures aim to encourage long-term and value investments, opening up China’s markets to a broader range of global investors.
The revised rules, jointly released by six government departments including the Ministry of Commerce and the China Securities Regulatory Commission, introduce several key changes. Notably, foreign individual investors are now allowed to make strategic investments in listed companies, a shift from the previous regulations that limited such investments to foreign juridical persons or organizations.
Lower Capital Requirements and New Investment Options
Under the new regulations, the capital requirements for foreign investors who do not seek controlling stakes in listed firms have been lowered. These investors must now have no less than $50 million in total actual assets or manage actual assets totaling no less than $300 million, reducing the barrier to entry for many potential investors.
Additionally, the revised rules introduce tender offers as a new option for making strategic investments. Previously, foreign investors could only invest through private placements and share transfer agreements. The inclusion of tender offers provides greater flexibility and opportunities for investors to participate in China’s capital markets.
Use of Overseas Shares and Eased Shareholding Requirements
Foreign investors intending to invest via private placements or tender offers are now permitted to use shares of non-listed overseas companies as consideration for acquisition payments. This change facilitates a wider range of investment strategies and simplifies the process for international investors.
The new rules also relax requirements on shareholding ratios and lock-up periods. For investments made through private placements, the shareholding ratio requirement has been removed entirely. For investments via tender offers and share transfer agreements, the minimum shareholding ratio has been lowered from 10 percent to 5 percent, making it easier for foreign investors to acquire stakes in Chinese listed companies.
Shorter Lock-Up Periods Encourage Flexibility
To encourage medium- and long-term investments while providing more flexibility, the mandatory lock-up period for acquired shares has been reduced. Under the new rules, the lock-up period has been shortened to no less than 12 months from the previous requirement of no less than three years. This change allows investors to adapt their investment strategies more dynamically in response to market conditions.
The easing of foreign investment rules reflects China’s ongoing efforts to open up its financial markets and create a more welcoming environment for international investors. By lowering barriers and providing more investment options, Chinese authorities aim to attract a broader spectrum of global capital, fostering growth and integration within the global economy.
Reference(s):
cgtn.com
