July 28, 2002	Sunday	Jamadi-ul-Awwal 17,1423

SHANGHAI, July 27: China proposed new rules on Saturday aimed at regulating acquisition of controlling stakes of domestically listed companies as part of its wider reforms of its nascent stock markets.

The rules are designed to regulate the purchase of listed companies, better boost market resources and protect investors’ legal rights, said the market watchdog China Securities Regulatory Commission (CSRC).

The CSRC is gathering public feedback on the rules, which were published on its Web site www.csrc.gov.cn and major securities newspapers. It did not say when the rules will take effect and officials were not immediately available for comment.

Chinese authorities usually announce proposed rules to solicit public opinions before officially implementing them.

Investors taking a controlling stake in a listed firm are not allowed to transfer control of the company within 12 months after the purchase, according to the rules.

Board directors and senior officials of the listed firm will not be allowed to implement policies such as issuing additional shares or convertible bonds and buying back shares or selling key assets during the stake acquisition without consulting other shareholders, the rules say.

Once an individual or a group of investors holds 30 per cent of the listed firm’s shares, he or they will have to inform shareholders and regulators of any additional stake purchase.

Aiming to protect shareholders, the rules also require investors to indicate that stake purchases are not attempts to take firms off from their listings.

China has nearly 1,200 companies listed in Shanghai and Shenzhen with a market capitalisation of about $500 billion that rivals Hong Kong as the second largest in Asia.—Reuters