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on september 24, the china securities regulatory commission issued the "opinions on deepening the reform of the merger and acquisition market of listed companies", pointing out that mergers and acquisitions are important market tools to support economic transformation and upgrading and achieve high-quality development. the new "nine national regulations" make important arrangements for the active merger and acquisition market. in order to further stimulate the vitality of the merger and acquisition market, the china securities regulatory commission, based on extensive research, has studied and formulated the "opinions on deepening the reform of the merger and acquisition market of listed companies", adhere to the market-oriented direction, and better play the role of the capital market as the main channel in corporate mergers and acquisitions. the main contents are as follows:

first, support listed companies to transform and upgrade towards new quality productivity. the csrc will actively support listed companies to carry out mergers and acquisitions around strategic emerging industries and future industries, including cross-industry mergers and acquisitions based on transformation and upgrading, acquisitions of unprofitable assets that help to strengthen the supply chain and improve key technology levels, and support "two innovation" sector companies to acquire upstream and downstream assets in the industrial chain, etc., to guide more resource elements to gather towards new quality productivity.

second, listed companies are encouraged to strengthen industrial integration. while supporting the development of emerging industries, the capital market will continue to help traditional industries reasonably improve industrial concentration and resource allocation efficiency through restructuring. the integration needs of listed companies will be supported by improving the lock-up period regulations and greatly simplifying the review procedures. at the same time, through arrangements such as "reverse linkage" during the lock-up period, private equity investment funds are encouraged to actively participate in mergers and acquisitions and restructuring.

third, further enhance regulatory tolerance. the csrc will respect market rules, economic rules, and innovation rules while respecting rules, and further enhance tolerance for matters such as restructuring valuation, performance commitments, peer competition, and related transactions, so as to better play the role of the market in optimizing resource allocation.

fourth, improve the transaction efficiency of the restructuring market. the csrc will support listed companies to issue shares and convertible bonds and other payment tools in installments, pay the transaction price in installments, and provide supporting financing in installments according to the transaction arrangements, so as to improve transaction flexibility and capital utilization efficiency. at the same time, a simplified restructuring review procedure will be established to greatly simplify the review process, shorten the review time limit, and improve restructuring efficiency for listed companies that meet the conditions.

fifth, improve the service level of intermediary institutions. an active m&a and restructuring market is inseparable from the functions of intermediary institutions. the csrc will guide securities companies and other institutions to improve their service capabilities, give full play to the role of transaction matching and professional services, and help listed companies implement high-quality m&a and restructuring.

sixth, strengthen supervision in accordance with the law. the csrc will guide all parties involved in transactions to conduct m&a and restructuring activities in a standardized manner, strictly fulfill various legal obligations such as information disclosure, crack down on all kinds of illegal and irregular behaviors, effectively maintain the order of the restructuring market, and effectively protect the legitimate rights and interests of small and medium-sized investors.

in order to implement the "opinions on deepening the reform of the merger and acquisition market of listed companies", the china securities regulatory commission and the stock exchanges revised the "administrative measures for major asset restructuring of listed companies" and other rules, and simultaneously solicited public opinions.

opinions of the china securities regulatory commission on deepening the market reform of mergers and acquisitions of listed companies

all dispatched offices, exchanges, subordinate units, associations, and departments within the china securities regulatory commission:

in order to thoroughly implement the spirit of the third plenary session of the 20th cpc central committee and the new "nine national policies", improve the "1+n" policy system of the capital market, further strengthen the resource allocation function of mergers and acquisitions and restructuring, give full play to the main channel role of the capital market in corporate mergers and acquisitions and restructuring, adapt to the needs and characteristics of new quality productive forces, support listed companies in injecting high-quality assets and enhancing investment value, the following measures are proposed.

1. assisting the development of new quality productivity

support listed companies to make layouts around technological innovation and industrial upgrading, and guide more resource elements to gather in the direction of new quality productivity. support listed companies on the science and technology innovation board and the growth enterprise market to acquire upstream and downstream assets in the industrial chain, and enhance the attributes of "hard technology" and "three innovations and four innovations". support listed companies with standardized operations to carry out cross-industry mergers and acquisitions that conform to business logic around the needs of industrial transformation and upgrading and seeking a second growth curve, and accelerate the pace of transformation to new quality productivity. support listed companies to acquire high-quality unprofitable assets that help to supplement and strengthen the chain and improve the level of key technologies in accordance with their own industrial development needs, without affecting their ability to continue operations and setting up relevant arrangements for the protection of the interests of small and medium-sized investors. implement a "reverse linkage" between the investment period of private equity funds and the lock-up period of shares acquired through restructuring, and promote a virtuous cycle of "raising funds, investing, managing and withdrawing".

2. increase support for industrial integration

encourage and guide leading listed companies to focus on their main businesses and increase the integration of listed companies in the industrial chain. improve policy regulations such as share lock-up periods, support mergers and acquisitions in the same industry and upstream and downstream between listed companies under different control, and mergers and acquisitions between listed companies under the same control. support listed companies in traditional industries to acquire assets in the same industry or upstream and downstream, increase resource integration, and reasonably improve industry concentration. support private investment funds to acquire listed companies in accordance with the law for the purpose of promoting industrial integration. support listed companies on the shanghai, shenzhen and beijing stock exchanges to carry out multi-level cooperation and help build characteristic industrial clusters.

iii. improving regulatory inclusiveness

give full play to the role of the market in price discovery and competitive consultation, and support the transaction parties to negotiate and determine the transaction price based on diversified evaluation methods such as asset-based method, income method, and market method. comprehensively consider the target asset operation model, r&d investment, performance growth, comparable companies in the same industry and comparable transaction pricing, and evaluate the fairness of the pricing of the m&a target from multiple angles. if a listed company purchases assets from a third party, the transaction parties can independently negotiate whether to set up a commitment arrangement. in line with the laws of industrial development, appropriately increase the tolerance for peer competition and related transactions formed by mergers and acquisitions and restructuring.

4. improve payment flexibility and audit efficiency

encourage listed companies to use a combination of payment tools such as shares, directional convertible bonds, and cash to implement mergers and acquisitions and reorganizations to increase transaction flexibility. establish a mechanism for installment payment of restructuring share consideration, and pilot a supporting fund-raising shelf issuance system. establish a simplified reorganization review procedure, streamline the review process and shorten the review and registration time for absorption mergers between listed companies, and for high-quality companies with standardized operations, a market value of more than 10 billion yuan, and an information disclosure quality evaluation of a for two consecutive years to purchase assets (not constituting a major asset reorganization). make good use of review mechanisms such as "small and fast" to implement a "green channel" for mergers and acquisitions of technology-based enterprises that have made breakthroughs in key core technologies, speed up the review process, and improve the convenience of mergers and acquisitions.

v. improving the service level of intermediary institutions

guide securities companies to increase investment in financial advisory services, give full play to their role in matchmaking, and actively promote m&a and restructuring transactions. regularly publish outstanding m&a and restructuring cases to play a leading role. strengthen the “baton” role of securities companies’ classification evaluation, increase the evaluation weight of financial advisory services, and refine the evaluation standards.

urge financial advisors, accounting firms, law firms, appraisal agencies and other intermediary institutions to fulfill their responsibilities and improve their professional quality. support listed securities companies to enhance their core competitiveness through mergers and acquisitions and restructuring, and accelerate the construction of first-class investment banks.

vi. strengthen supervision in accordance with the law

guide all parties to the transaction to conduct m&a and restructuring activities in a standardized manner and strictly fulfill various legal obligations such as information disclosure. strictly supervise "deceptive" restructuring, severely punish illegal acts such as fraudulent issuance, financial fraud, insider trading, etc. in m&a and restructuring, crack down on all kinds of illegal "shell protection" behaviors, maintain the order of the m&a and restructuring market, and effectively protect the legitimate rights and interests of small and medium-sized investors.

china securities regulatory commission

september 24, 2024