SOE participation in restructuring of listed Companies (II)

Previously we have discussed approval procedures for scenarios where participation of state-owned shareholders in the restructurings of listed companies results in change of their equity in the listed companies. The authors will focus on the procedures for cases where financial state-owned enterprises (SOEs) take part in material asset restructurings of listed companies.

It is not uncommon that a financial SOE acquires a stake in a target as a strategic investor, as an initial step leading to the subsequent participation in a material asset restructuring of a listed company. The ultimate purpose of the action plan is not to take control of, or obtain the power to direct, management activities of the target, but to acquire shares in the listed company through the restructuring.

Therefore, in addition to statutes concerning state-owned assets and restructurings of listed companies including the Company Law, the Securities Law, the Measures for the Administration of Material Asset Restructurings of Listed Companies (amended in 2016), and the Law on State-Owned Assets of Enterprises, these restructurings are also governed by the Circular on Further Clarifying Asset Management Issues Relating to Direct Equity Investment by Financial State-owned Enterprises (the circular) of the Ministry of Finance.