In order to implement the policy requirements of the Party Central Committee and the State Council in the "Several Opinions on Financial Service for Private Enterprises", and give further play to the positive role of the exchange-traded bond market in serving the real economy, according to the unified deployment of the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE), the National Equities Exchange and Quotations (NEEQ) and China Securities Depository and Clearing Co., Ltd. (CSDC) jointly formulated and promulgated the “Implementation Measures for Business of Non-public Issuance of Convertible Corporate Bonds by Non-Listed Companies” (the “Implementation Measures” for short), expanding the scope of the issuers in the non-public issuance of convertible corporate bonds (the Convertible Bonds for short) from the innovative companies and startups to non-listed companies.
The "Implementation Measures" mainly includes the contents in the following 6 aspects. First of all, the scope of application for the issuers is expanded. The issuers of the Convertible Bonds shall be the joint stock limited companies whose stocks are not listed on the stock exchange, and the rule is also applicable to the limited liability companies in implementation. Secondly, the issuance mode is determined. The Convertible Bonds shall be issued in a non-public manner. Before the issuance of the Convertible Bonds and after the conversion, the number of the shareholders of a joint stock limited company shall not exceed 200, and that of a limited liability company shall not be more than 50. Thirdly, the responsibilities are assigned to different bodies. If the issuer is a company listed on the NEEQ, the exchange shall consult with the NEEQ to confirm whether it meets the listing conditions. Fourthly, the conversion process is specified. The "Implementation Measures" stipulates different conversion operation procedures for the two different types of issuers: the listed and non-listed companies on the NEEQ. Fifthly, the requirements for information disclosure are defined. According to the particularity of the Convertible Bonds, the differentiated information disclosure requirements and continuous obligations for the parties during the bond issuance and duration are proposed. Sixthly, the adaptation to the pilot program of convertible bonds of innovative companies and startups is made clear. If an innovative company or a startup plans to issue the Convertible Bonds in a non-public manner, the relevant provisions of the “Implementation Measures” and the “Guiding Opinions of China Securities Regulatory Commission on Launching Pilot Program of Corporate Bonds of Innovative Companies and Startups” (CSRC Announcement [2017] No. 10 Document) shall be implemented.
The introduction of the non-public issuance of convertible corporate bonds, an important measure for the capital market to support the real economy and make the financing more accessible and affordable for the private companies and small and medium-sized enterprises, is conducive to expanding the financing channel of the enterprises and lowering their financing cost. Going forward, the SSE will, under the leadership of the CSRC, continue to implement the requirements for strengthening the reform of the investment and financing systems, explore the new service and support modes for the bond market, bring into full play the role of the exchange-traded bond market in serving the real economy, and better bolster the supply-side structural reform.
