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On April 15, the Shanghai Stock Exchange (SSE) issues the “Notice of Relevant Issues of Revoking Restrictions on Transfer of Stock Shares with Terminated Sales Limit and Other Business Lines” (the “Notice” for short), which specifies that a listed company’s shareholder selling stock shares with terminated sales limit that are nearly, or equivalent to, or more than 1% of the total issued shares of the listed company through the auction trading system of the SSE within 1 month will not be regulated as a behavior of abnormal trading. Besides, some business rules, such as the "Notice of Implementation of ‘Guidance Opinion on Transfer of Stock Shares with Terminated Sales Limit in Listed Companies’", are revoked correspondingly. In addition, the “Notice” specifies that regulations on transfer of stock shares with terminated sales limit and their participation in margin trading and securities lending mentioned in relevant business rules, such as the “Detailed Rules on SSE Members’ Management on Clients’ Securities Trading”, will no longer be applicable.
According to an official of the SSE, the “Notice” is issued to support the revocation of the "Guidance Opinion on Transfer of Stock Shares with Terminated Sales Limit of Listed Companies" (the “Guidance Opinion” for short) of the China Securities Regulatory Commission (CSRC). As the “Guidance Opinion” mainly stipulates that a listed company’s shareholder should conduct transfer of shares through the block trading system of the SSE, in case of lessening holding of stock shares with terminated sales limit that are 1% or above of the total issued shares of the listed company within 1 month. After the “Guidance Opinion” is revoked, transfer of stock shares with terminated sales limit will no longer be subject to the above restriction. Through the issuance of the “Notice”, the SSE has completed follow-up work in response to the relevant rules of the “Guidance Opinion”, as well as adjusted regulatory requirements for transfer of stock shares with terminated sales limit and other business lines.
After the “Notice” is issued, a listed company’s shareholder can choose auction trading or block trading for transfer, in case of lessening holding of stock shares with terminated sales limit that are 1% or above of the total issued shares of the listed company within 1 month, and no limit is imposed on the participation of the stock shares with terminated sales limit in margin trading and securities lending; however, the shareholder should still fulfill obligation of information disclosure according to relevant stipulations made by the CSRC and the SSE when lessening holding of the stock shares with terminated sales limit. Moreover, as the “Notice” does not involve stipulations related to sales limit of shares, equity changes of shareholders holding more than 5% of total issued shares of a listed company, and others, a listed company’s shareholder should still abide by the above stipulations, namely, the shareholder should halt trading according to law when lessening holding of stock shares with terminated sales limit or other shares that are 5% of the total issued shares of the listed company, and fulfill obligation of relevant information disclosure.
