LawFlash

Shanghai and Shenzhen Stock Exchanges Issue Detailed Implementation Rules for Securities Trading by QFIIs and RQFIIs

May 19, 2014

上交所/深交所分别发布 QFII 和 RQFII 证券交易实施细则

The Shanghai Stock Exchange (“SSE”) issued its Detailed Implementation Rules (“SSE Rules”) for Securities Trading by Qualified Foreign Institutional Investors (“QFIIs”) and Renminbi Qualified Foreign Institutional Investors (“RQFIIs”, and together with QFIIs, “Qualified Investors”) effective as of March 19, 2014. Shortly after, the Shenzhen Stock Exchange (“SZSE”) issued its own rules (“SZSE Rules”) effective as of April 25, 2014, which are substantially the same as the SSE Rules (for the purpose of this Alert, the SSE Rules and the SZSE Rules are referred to as the “Qualified Investor Rules”). Under the Qualified Investor Rules, QFIIs and RQFIIs are consolidated for uniform regulation in light of the similarities between the two programs. 

The Qualified Investor Rules reflect the most recent regulatory requirements of the China Securities Regulatory Commission (“CSRC”) under its July 2012 QFII Provisions1 and March 2013 RQFII Provisions2 (collectively the “CSRC Regulations”). The key features of the Qualified Investor Rules are as follows.

I. ELIGIBLE PRODUCT TYPES

The CSRC Regulations specify the scope of products eligible for investment by Qualified Investors, including but not limited to stocks, bonds and warrants traded or transferred on the SSE/SZSE. The Qualified Investor Rules further enumerate the foregoing eligible stock-exchange traded or transferred products as follows3:

(1)     stock, including common stock, preferred stock and other stock recognized by SSE/SZSE;

(2)     bonds, including treasury bonds, when-issued trading treasury bonds, local government bonds, corporate bonds, enterprise bonds, convertible corporate bonds, convertible corporate bonds with warrants, exchangeable corporate bonds, privately placed bonds by small and medium enterprises, policy-oriented financial bonds, subordinated bonds, and other bond products recognized by SSE/SZSE;

(3)     funds, including various types of ETFs, closed-end funds, open-end funds, money market funds and other fund products recognized by SSE/SZSE;

(4)     warrants;

(5)     asset backed securities; and

(6)     other types of securities products permitted by the CSRC.

This is the first time that Qualified Investors are expressly allowed to invest in asset-backed securities.   

II. MAXIMUM SHAREHOLDING PERCENTAGE REQUIREMENTS

The Qualified Investor Rules reiterate the restrictions on maximum shareholdings set forth under the CSRC Regulations with minor technical clarification:

(1)     a single foreign investor’s investment in the shares of a China-listed company held through Qualified Investor(s) shall not exceed 10% of the total shares of the listed company;

(2)     the total number of A shares held by all foreign investors in a single China-listed company shall not exceed 30% of the total shares of the listed company.

Under the Qualified Investor Rules, if the total number of A shares held by all foreign investors in the same listed company reaches or exceeds an aggregate of 26% of the total shares of a company, SSE/SZSE will publish this aggregate percentage on its website before the opening of the following trading day. The Qualified Investor Rules also set out detailed procedures for close-out/reduction of excessive positions in order to ensure the above-mentioned maximum threshold is kept.

III. REPORTING REQUIREMENTS

The PRC custodian bank and the PRC securities company(ies) of a Qualified Investor are required to file with SSE/SZSE basic information of the Qualified Investor as well as basic information of the PRC custodian bank and the PRC securities company(ies). The PRC custodian bank is required to report relevant information upon the occurrence of any specified major event on the part of the Qualified Investor within 5 business days of the occurrence of the event, such as when (i) the Qualified Investor changes its name or legal representative; (ii) the controlling shareholder of the Qualified Investor is changed; (iii) the Qualified Investor increases or decreases its capital; (iv) the Qualified Investor is implicated in any material proceeding or other material event; (v) any major sanctions are imposed on the Qualified Investor outside China; or (vi) the Qualified Investor is sanctioned by CSRC or the State Administration of Foreign Exchange etc.

In the event of any irregular trading, SSE/SZSE may require the Qualified Investor to report the securities trading of the de-facto investor(s) underlying the Qualified Investor as well as the shareholding held by the Qualified Investor.

IV. COMPUTATION OF SHAREHOLDINGS FOR THE PURPOSE OF INFORMATION DISCLOSURE

The Qualified Investor Rules require that when making disclosures in accordance with its disclosure obligations, each Qualified Investor and de-facto investor underlying the Qualified Investor shall separately compute its aggregate holdings of the onshore listed shares and offshore listed shares of the same listed company, and comply with the relevant laws and regulations governing information disclosure. 

This provision is helpful to clarify the long-questioned issue whether the shares held by a Qualified Investor and its de-facto investors should be calculated on a consolidated basis for the purpose of the PRC securities and company laws. According to this provision, for information disclosure purposes, the shares held by the Qualified Investor and its de-facto investors will not be calculated on a consolidated basis solely because a de-facto investor indirectly invests in A-shares through a Qualified Investor.            

V. CONCLUSION

The Qualified Investor Rules will help to promote the development of the QFII program and the RQFII program by clarifying the scope of eligible products traded or transferred in the SSE and the SZSE and some technical issues.

Endnotes

1A Bingham alert can be found under China Adopts Final Rule to Ease Regulation on QFIIs.

3Qualified Investors are allowed to subscribe for initial public offerings of stocks, issuances of bonds, and follow-on stock issuances and share allotments.

上交所/深交所分别发布 QFII 和 RQFII 证券交易实施细则

上海证券交易所(“上交所”)于2014年3月19日发布实施合格境外机构投资者(“QFII”)和人民币合格境外机构投资者(“RQFII”,与QFII合称为“合格投资者”)证券交易实施细则(“上交所细则”)。深圳证券交易所(“深交所”)随后于2014年4月25日发布实施深交所实施细则(“深交所细则”)。深交所细则与上交所细则基本一致(为本文之目的,上交所细则和深交所细则合称为“合格投资者细则”)。鉴于QFII与RQFII两项试点之间的共性特点,在合格投资者细则中,QFII和RQFII被归并进行统一监管。

合格投资者细则内纳入了中国证券监督管理委员(“证监会”)2012年7月QFII规定1以及2013年3月RQFII规定2(统称为“证监会规定”)项下的最新监管要求。合格投资者细则的主要内容简述如下。

  一、  有资格投资的产品品种

证监会规定内明确了合格投资者有资格投资的产品范围,包括但不限于在上交所/深交所交易或转让的股票、债券和权证。合格投资者细则对合格投资者有资格投资的交易所交易或转让的产品进行了进一步细化规定,具体如下3::

(1)     股票,包括普通股、优先股以及上交所/深交所认可的其它股票;

(2)     债券,包括国债、国债预发行、地方政府债、公司债券、企业债券、可转换公司债券、分离交易可转换公司债券、可交换公司债券、中小企业私募债、政策性金融债、次级债和上交所/深交所认可的其它债券品种;

(3)     基金,包括各类交易型开放式指数基金(ETF)、封闭式基金、开放式基金、货币市场基金以及上交所/深交所认可的其它基金品种;

(4)     权证;

(5)     资产支持证券;以及

(6)     证监会允许的其它证券品种。

合格投资者被明确允许投资于资产支持证券尚属首次。  

 二、 最高持股比例限制规定

合格投资者细则重申了证监会规定所明确的有关最高持股比例限制,并做出了细微的技术性澄清:

(1)     单个境外投资者通过合格投资者持有一家上市公司股票的,持股比例不得超过该公司股份总数的10%;

(2)     所有境外投资者对单个上市公司A股的持股比例总和,不超过该上市公司股份总数的30%。

根据合格投资者细则的规定,如果所有境外投资者持有同一上市公司A股数额合计达到或超过该公司股份总数的26%,上交所/深交所将于次一个交易日开始前通过其网站公布境外投资者所占总比例。合格投资者细则还规定了一套详细的平仓/减持程序,以确保不超出最高限额比例。

  三、  报备要求

合格投资者境内托管人和境内证券公司应向上交所/深交所报备合格投资者基本信息以及境内托管人和境内证券公司各自的基本信息。在合格投资者出现重大事件时 ,其托管人应在事实发生之日起5个工作日内将有关情况报上交所/深交所备案,重大事件,例如(i)变更机构名称或法定代表人;(ii)变更控股股东;(iii)增加或减少注册资本;(iv)涉及重大诉讼或其他重大事件;(v)在境外受到重大处罚;或(vi)受到证监会或国家外汇管理局处罚。

如果发生异常交易行为,上交所/深交所可要求合格投资者及时报告其名下实际投资者的证券交易及其股份持有情况。

 四、 履行信息披露义务时的持股比例计算

合格投资者细则规定,合格投资者及其名下的实际投资者在履行信息披露义务时,应各自合并计算实际持有的同一上市公司的境内上市股和境外上市股,并遵守信息披露的有关法律法规。

该规定帮助澄清了长久以来的一个疑问,即为中国证券法和公司法之目的,合格投资者及其名下的实际投资者各自持有的股份是否应该合并计算。根据上述规定,为信息披露之目的,不会仅因实际投资者通过合格投资者间接投资于A股而要合并计算合格投资者及其实际投资者各自所持股份。      

 五、 结论

合格投资者细则澄清了合格投资者有资格投资的在上交所/深交所交易或转让的产品范围以及一些技术性问题,这将有助于促进QFII和RQFII的发展。

1斌瀚有关此规定的分析文章参见: 中国颁布规定放松对合格境外机构投资者的管制

3合格投资者可参与新股发行、债券发行、股票增发和配股的申购。

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Ye-Xiaowei
Beglin-Brian

This article was originally published by Bingham McCutchen LLP.