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In order to push forward the high-level opening-up of the capital market, promote the sound development of H-shares companies and advance H-shares “Full Circulation” reform with safety and efficiency, with the approval of China Securities Regulatory Commission (CSRC), China Securities Depository and Clearing Corporation Limited (CSDC) and Shenzhen Stock Exchange (SZSE) jointly issued the Implementation Rules for H-shares “Full Circulation” Business (hereinafter referred to as “Implementation Rules”) on December 31 and put it into force on the same day.
Under the framework of the Guidelines on Applying for “Full Circulation” Business for H-shares Companies’ Domestic Unlisted Shares, the Implementation Rules is fundamental rules governing the H-shares “Full Circulation” registration and custody as well as transaction settlement business. It consists of 9 chapters, totaling 51 articles, namely, general provisions, cross-border transfer registration, depository and holding record-keeping and maintenance, transaction entrustment and order transfer, clearing settlements, nominal holder services, risk management, management of settlement participating institutions and banks and supplementary provisions. In terms of the registration and custody of shares, the shares are registered, in the overseas market, in the Hong Kong Settlement Account System in the name of CSDC (Hong Kong) after undergoing the cross-border transfer registration and will be, in the domestic market, carried over and maintained in details through A-shares accounts of SZSE. With regard to transaction settlement, investors place an entrustment order of shares through domestic securities companies to realize share circulation on the Stock Exchange of Hong Kong Ltd.
It should be noted that the function of domestic shareholders of H-shares companies to increase its holdings of the company’s shares (including rights issue within quota and public distribution) has not been launched for technological reasons. It will be rolled out later when technology, system and other conditions are ready.
On the basis of pilot experiences, the steady progress of H-shares “Full Circulation” reform is favorable for unifying various shareholders benefits of H-shares companies and improving corporate governance, for helping domestic companies gain development by making use of both domestic and overseas markets and their resources, and for the development of Hong Kong’s capital market. Next, SZSE will, in accordance with the arrangement of the CSRC, work with CSDC to guide relevant parties, and implement the Implementation Rules to protect legitimate rights and interests of shareholders, and ensure the successful start and steady running of the H-shares “Full Circulation” reform.
