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The Shanghai Stock Exchange (SSE) has released the “Rules for Corporate Bonds’ Listing (Revised in 2015)” (the Rules), the “Provisional Measures on Business Administration of Non-public Issuance of Corporate Bonds” (the Provisional Measures) and the “Measures on Investor Suitability Management in Bond Market” (the Measures), in a bid to cement management on corporate bonds’ listing, protect legitimate rights and interests of investors and facilitate sustainable growth of the corporate bond market. The above 3 supporting rules shall be put into effect as of the date of the release.
Main contents involved in the 3 supporting rules are as follows:
1. About the Rules. The Rules standardizes the listing of publicly issued corporate bonds: first, bond categorization and dynamic management are strengthened; second, responsibilities of professional agencies including underwriters are stressed and clarified; third, listing procedure is simplified; fourth, efforts are made to cement information disclosure management and optimize information disclosure procedure; fifth, regulation on bond’s duration is intensified to protect legitimate rights and interests of investors; sixth, self-regulatory system is perfected, and in-process and aftermath regulation are strengthened as well.
2. About the Provisional Measures. The SSE has formulated the Provisional Measures on the basis of the existing rules for private placement bonds, in a bid to standardize transfer of non-publicly issued bonds, with main contents as follows: first, transfer procedure is simplified; second, features of private placement bonds are highlighted, and the regulatory system is consummated; third, differences of special bond products are emphasized to boost the growth of the private placement bond market.
3. About the Measures. According to relevant categorization standard in the “Management Measures on Issuance and Trading of Corporate Bonds”, the Measures is formulated after the SSE’s former requirements for investor suitability are rationalized, integrated and revised. The revised contents are as follows: first, standard of professional investors is cancelled while that of qualified investors is put into force; second, scope of the bonds in which investors may invest is specified; third, the investor suitability management is perfected, and the channel for reporting and filing the name list is specified.
4. About arrangement for the systematical transitions of stock corporate bonds. The notice of releasing the 3 supporting rules has specified relevant systematical transitions of stock corporate bonds. The main contents are as follows: first, underwriters, trustees and other professional agencies of stock corporate bonds should fulfill duties and obligations according to the new rules; second, the bond risk alert system will not be implemented; third, pre-issuance filing will not be carried out for former SMEs private placement bonds, securities companies’ short-term corporate bonds, and private placement bonds for mergers, acquisitions and reorganizations; fourth, about the systematical transition of investor suitability. The requirement for the investor suitability of the former stock corporate bonds that ordinary investors are allowed to buy remains unchanged, while that of other stock corporate bonds is adjusted to be qualified investors or qualified institutional investors.
Since it soliciting opinions on March 20, 2015, the SSE has received more than 60 pieces of written opinions from securities companies, credit rating agencies, individuals and others. The market agrees with the 3 supporting rules and advises to release them as soon as possible. These opinions mainly involve information disclosure, professional agencies’ duties, entry-into-force conditions for bond holders’ meeting, and investor suitability standard. In light of the market opinions, the following revisions are seen in the supporting rules:
(1) Postponed disclosure of report on trusteeship affairs is added. Besides, the time for disclosing periodical rating report is adjusted from June 30 ever year to within 2 months after disclosure of issuer’s annual report.
(2) It is specified that disclosure of periodical reports should be fixed in advance if non-publicly issued bonds go through credit rating.
(3) With regard to non-publicly issued bonds, proportions that trigger the need for information disclosure of significant issue due to changes of issuer’s directors and supervisors and other changes are increased.
(4) Relevant articles and clauses are revised and perfected according to the market opinions.
Some individual investors suggest that the standard for financing party of collateralized repo of bonds adopt steady transition. Therefore, the SSE specified in the notice of releasing the 3 supporting rules that a 6-month transitional period will be given. During the transitional period, investors who have already participated in the financing transaction of collateralized repo of bonds may still conduct transaction according to former rules. After the transitional period, investors who do not meet the conditions for qualified investors mentioned in the new rules will not be allowed to participate in financing transaction.
