China Unveils Preferred Share Pilot Program for Listed Companies and Non-Listed Public Companies

中国启动上市公司和非上市公众公司优先股试点

On November 30, 2013 the State Council issued Guiding Opinions on Launching Pilot Program for Preferred Shares (the “Opinions”), which set forth 16 guidelines concerning the rights and obligations of preferred shareholders, the issuance and trading of preferred shares, and associated rules and policies.

1. Preferred Shares

Preferred shares refer to a type of shares to be issued pursuant to the PRC Company Law, whose holders will have priority over common shareholders on the distribution of dividends and liquidation proceeds, but limited rights to participate in the management of the issuer. The Opinions provide additional guidelines regarding preferred shares’ privileges in respect of the distribution of dividends and liquidation proceeds, conversion and repurchase of preferred shares, voting rights, and how to treat preferred shares when determining whether a threshold of shareholding has been reached in certain situations.

2. Eligible Issuers

Both listed companies (including overseas-listed companies registered in China) and non-listed public companies will be able to issue preferred shares under the pilot program. Private companies will not be eligible to participate.

3. Series of Preferred Shares

During the pilot period, issuers may not issue preferred shares with different seniority in respect of the receipt of dividends and liquidation proceeds, but may issue preferred shares with different rights in respect of other terms.

4. Size of Preferred Shares

The aggregate number of outstanding preferred shares may not exceed 50% of the total number of outstanding common shares of an issuer, and the capital raised through issuance of preferred shares may not exceed 50% of the net assets of the issuer immediately prior to such issuance.

5. M&A

Preferred shares can be used as consideration in a M&A transactions and restructuring deals. A tender offer for a listed company must be extended to all shareholders, including the holders of preferred shares, but different terms may be offered to the common shareholders and preferred shareholders.

6. Market Access for Foreign Investment

When a mandatory maximum foreign investment percentage exists, the percentage shareholding of a foreign investor is computed by aggregating the number of both preferred shares and common shares held.

The launch of the pilot program is a positive step, providing both listed companies and non-listed public companies an additional avenue of financing, while diversifying investment channels for investors.

中国启动上市公司和非上市公众公司优先股试点

2013年11月30日，国务院公布《国务院关于开展优先股试点的指导意见》（“指导意见”），共包括16点意见，涉及优先股股东的权利与义务、优先股发行与交易以及相关配套政策与规定。

虽然，尚没有明确的优先股试点企业名单，但是业内普遍认为商业银行、保险公司和公共事业单位或将先行参与试点。中国证券监督管理委员会（“证监会”）现正制定指导意见的具体实施规定。

1. 优先股

优先股指根据《中国公司法》发行的一类股份，其持有人优先于普通股股东分配公司利润和清算所得，但参与公司管理的权利受到限制。指导意见就优先股优先分配利润和清算所得的特权、优先股转换与回购、表决权以及在特定情况下认定股东持股比例是否达到限额时对优先股如何对待等问题做了额外规定。

2. 适格发行人

上市公司（包括注册地在境内的境外上市公司）和非上市公众公司都可参与试点发行优先股。非公众公司将无资格参与试点。

3. 序列优先股

在试点期间，发行人不得发行在股息分配和清算所得分配上具有不同优先顺序的优先股，但允许发行在其它条款上具有不同设置的优先股。

4. 优先股规模

发行人已发行优先股不得超过其已发行普通股股份总数的百分之五十，且发行优先股的筹资金额不得超过发行前发行人净资产的百分之五十。

5. 并购

优先股可作为并购和重组交易的支付对价。上市公司收购要约适用于其所有股东，包括优先股股东，但可针对优先股股东和普通股股东提出不同的收购条件。

6. 外资行业准入

在国家规定了外商投资上限比例的情况下，外资持股比例按优先股与普通股合并计算为准。

启动优先股试点有着积极的意义，它不仅为上市公司和非上市公众公司提供了进一步的融资手段，也有利于为投资者提供多元投资渠道。