Chinese regulators are moving to relax restrictions on merger and acquisition deals involving listed companies in a bid to allow them to improve businesses through asset restructuring amid slowing economic growth.
The China Securities Regulatory Commission (CSRC) Thursday issued a draft revision of rules regarding listed companies’ asset restructuring to seek public comments until July 20. The revision scraps profitability requirements in merger and acquisition deals, ease fundraising curbs to support listed companies’ restructuring and encourage high-tech companies to restructure.
Analysts said that the new rule was a good news for Chinese tire companies to realize listing in share market, and more inclusive for asset merges.
Nowadays, there were many tire companies planning to list in A-share market, like Sentry, Wanli, Xingyuan tire etc., and some listed tire companies mulling asset acquisition, like Zhongce Rubber selling 57% shares to other listed companies.
The CSRC tightened M&A and restructuring rules in 2016, as a way to curb stock speculation following the equity market crash in the summer of 2015. After the policy revision, listed companies needed to pass comprehensive scrutiny to get regulatory approval for restructuring. These included requirements on total assets, net assets, revenue and profit.
The authority also tightened approval for fundraising related to restructuring after 2016. As a result, the CSRC approved 267 secondary share placements in the year of 2018, sharply down from 813 in 2016 and 540 in 2017, according to financial data from Wind.
