一周立法最新双语动态，我们来了！ 第74期

MIIT Issues Provisions on Switching Telecoms Carriers While Keeping Phone Numbers Unchanged

On November 11, 2019, the Ministry of Industry and Information Technology (MIIT) issued the Provisions on the Administration of Services of Switching Telecommunications Carriers Without Changing Phone Numbers.

With a total of 15 articles, the Provisions mainly include: First, putting forward the basic principles and general requirements for the service of switching telecommunications carriers without changing phone numbers. Second, clarifying its regional scope and number range. The service means that a cellular mobile phone subscriber can change the basic telecommunication service operator signed while the existing number of the subscriber remains unchanged within the same local network, in which the subscriber numbers of Internet of Things, satellite mobile business, or mobile communication resale business are not included for the time being. Third, specifying the rights and responsibilities of telecommunications administration bodies, telecommunications carriers and subscribers. Fourth, stipulating nine prohibited acts of telecommunications enterprises. Carriers may not impede the service, interfere with subscribers’ choices, obstruct the network switch without number change, lower the communication service quality, conduct comparative or false publicity, or otherwise commit any violation. Fifth, requiring telecommunications enterprises to effectively conduct the risk notification work for subscribers, which specifically means that they should clearly inform subscribers of the risks and losses that they may face in handling of the service of switching telecommunications carriers without changing phone numbers, and obtain subscribers’ confirmation.

CSRC to Amend Rules on Secondary Offerings of Listed Companies

On November 8, 2019, the China Securities Regulatory Commission (CSRC) is requesting public comments on the Administrative Measures for the Offering of Securities by Listed Companies, the Interim Measures for the Administration of the Offering of Securities by Companies Listed on ChiNext, the Detailed Implementing Rules for the Non-Public Offering of Stocks of Listed Companies, and other rules on the secondary offerings, and comments may be submitted until December 8, 2019.

The proposed revisions mainly include: The first is to simplify the offering conditions and broaden the coverage of the secondary offerings on ChiNext. The conditions that the debt-to-asset ratio at the end of the most recently completed period is more than 45% for public offering of securities on ChiNext, and that profits have been made for two consecutive years for non-public offering of securities on ChiNext are cancelled; and the offering condition that the funds raised in the previous offering have been basically used up, and the progress and effects of use are basically consistent with the information disclosed is changed into one of the requirements for information disclosure. The second is to optimize non-public institutional arrangements and support listed companies in introducing strategic investors. Where the resolution of the board of directors of a listed company previously determines all the investors to which stock is offered which are also strategic investors, the base day for pricing may be the date of announcement of the resolution of the board of directors, the date of announcement of the resolution of the shareholders’ meeting, or the first day of the issue period for the non-public offering of stocks; and the pricing and lock-up mechanisms for non-public offering of stocks are adjusted by requiring that the issue price may not be lower than 80% of the average price of the company’s stock during the 20 trading days before the base day for pricing, as opposed to the original 90% thereof, respectively shortening the lock-up period from the current 36 months and 12 months to 18 months and 6 months, with the relevant restrictions of the shareholding reduction rules lifted, and adjusting the current maximum number of investors to which stock is offered on the main board (SME board) and ChiNext in an non-public manner from 10 and 5 respectively to 35. The third is to appropriately extend the validity period of the approval documents to make it more convenient for listed companies to choose the period between approval and offering. The validity period of the approval document for secondary offering is extended from 6 months to 12 months.

Comments Solicited on Relevant Business Rules on the New Third Board

On November 8, 2019, the China Securities Regulatory Commission (CSRC) intended to amend the Measures for the Supervision and Administration of Unlisted Public Companies, and drafted the Measures for the Administration of Information Disclosure by Unlisted Public Companies (Exposure Draft).

The revised contents of the Measures mainly include: First, introducing the rules on public offering to unspecific qualified investors, meaning that a quoted company is allowed to publicly issue stocks to unspecific qualified investors on the NEEQ, along with the sponsorship and underwriting systems implemented. Second, optimizing the private placement system, under which the restriction of no more than 35 investors on private placement by a quoted company are to be lifted, and the quoted company can handle the issuance on its own. Third, optimizing the review mechanism for public transfer and issuance. Where the public transfer and issuance of stock requires the performance of the administrative licensing procedures, the National Equities Exchange and Quotations Co., Ltd. should issue self-discipline regulatory opinions firstly, and the CSRC will conduct the confirmation on this basis. Fourth, innovating on the regulatory methods by following the differential information disclosure principle, clarifying the legal liabilities for violations occurred in corporate governance, enhancing the responsibilities of intermediaries, and urging the company to carry out well-regulated operation.

The Exposure Draft mainly includes: First, based on the actual situation of the NEEQ market and the quoted companies, clarifying the basic requirements for information disclosure of quoted companies to ensure the quality. Second, establishing the differentiated information disclosure system in a hierarchical manner, with differentiated arrangements made in terms of disclosure form, disclosure content and management commensurate with the actual situation of SMEs in various development stages and information needs of investors. Third, connecting the administrative supervision by the CSRC to the self-discipline regulation by the NEEQ Co., Ltd., and strengthening the division of labor and cooperation for an efficient regulatory mechanism.

New Rules on Equity Incentives of Listed Companies Controlled by Central Enterprises Issued

Recently, the State-owned Assets Supervision and Administration Commission of the State Council issued the Notice of Matters Concerning Effectively Conducting the Equity Incentives of Listed Companies Controlled by Central Enterprises.

The Notice provides for the scientific formulation of the equity incentive plan, perfection of the equity incentive performance assessment, support for the implementation of equity incentives by companies listed on the SSE STAR Market, and improvement of the equity incentive management system.

The Notice clarifies that the STAR Market listed companies controlled by central enterprises should formulate the equity incentive plans according to the relevant STAR Market listing rules in implementing the equity incentives in principle. Where a company listed on the STAR Market implements the equity incentives by granting restricted stocks, if the granted price is less than 50% of the fair market price, the listed company should appropriately extend the lock-up period and unlocking period of the restricted stocks, and set the condition that the unlocking performance goal is not lower than the company's average performance level in the past three years or the 75th percentile level of the same industry. Where a company listed on the STAR Market that has not made profits implements the equity incentives, the price for the granted restricted stocks should be not less than 60% of the fair market price.

SASAC Issues Operating Guidelines on the Mixed-Ownership Reform of Central Enterprises

Lately, the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council issued the Operating Guidelines on the Mixed-Ownership Reform of Central Enterprises.

According to the Guidelines, where subsidiaries at all levels owned by central enterprises absorb non-public capital or collective capital to implement mixed-ownership reform by means of transfer of property rights, capital or share increase, Initial Public Offering (IPO), and asset restructuring of listed companies, among others, these Operating Guidelines should be referred to in the relevant work.

The Guidelines provide that, to implement the mixed-ownership reform, their subsidiaries at all levels should generally follow the basic operating procedures: conducting a feasibility study, formulating a plan for the reform, executing the decision-making and approval procedures, carrying out the auditing and assessment, introducing non-public capital investors, and promoting the enterprise operation mechanism reform. If they carry out the mixed-owned reform in the form of establishing a new enterprise, making outbound investment by merger or acquisition, or equity investment, the relevant procedures for central enterprise investment administration should be performed.

In addition, the Guidelines clarify the key points of operations in the course of capital mixing in terms of asset auditing and assessment, and mixed-ownership reform through the property right market or the stock market, and in particular make arrangements for institutional reform, which include corporate governance as well as management and control methods of mixed-ownership enterprises, reforms of three systems, and incentive and restraint mechanisms, etc.