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E-mail China.org.cn, October 18, 2024
Red Star News:
Currently, the market is closely watching mergers and acquisitions (M&A) and restructuring of listed companies. You mentioned the need for multiple measures to invigorate the M&A and restructuring market. Regulatory authorities have been promoting market-oriented reform of M&A and restructuring in recent years. What specific measures will the CSRC implement next to better stimulate efficiency and vitality in the capital market's M&A and restructuring? Thank you.
Wu Qing:
Thank you for your question. M&A and restructuring are indeed significant in the capital market. Supporting corporate M&A and restructuring to further promote effective resource allocation is a crucial function of the capital market. Particularly in the context of accelerating global industrial transformation and our country's economic structural upgrading, it's imperative to leverage the key role of corporate M&A and restructuring to aid industrial integration and enhance quality and efficiency. The new "Nine Measures" make important arrangements to invigorate the M&A and restructuring market. To further stimulate market vitality, the CSRC has formulated the Opinions on Deepening the Reform of the M&A and Restructuring Market for Listed Companies, based on extensive research and input from various parties. We adhere to market-oriented approaches to better utilize the capital market as a primary channel in M&A and restructuring. The main contents of the Opinions include:
First, we will strongly support listed companies in their transformation and upgrading towards new quality productive forces. The CSRC will actively support listed companies in conducting M&A and restructuring centered on strategic emerging industries and future industries. This includes cross-industry M&A aimed at transformation and upgrading, as well as acquisitions of unprofitable assets that help strengthen industrial and supply chains and enhance core technologies in key fields. These efforts aim to guide more resources and production factors towards new quality productive forces.
Second, we will actively encourage listed companies to strengthen industrial integration. China is the only country globally with a complete range of industrial sectors. However, we also see that some industries are large but not strong, and numerous but not of high quality. While supporting emerging industries, the capital market will continue to help traditional industries improve industrial concentration and resource allocation efficiency through restructuring. We will support the integration needs of listed companies by significantly streamlining the review process. Additionally, we will encourage private investment funds to actively engage in M&A and restructuring through mechanisms such as "reverse linkage" of lock-up periods.
Third, we will further enhance regulatory tolerance, a topic of ongoing market interest. While adhering to rules, the CSRC will respect market, economic, and innovation dynamics. We will increase our tolerance for matters such as restructuring valuations, performance commitments, horizontal competition, and related-party transactions based on actual circumstances to better optimize resource allocation through market mechanisms.
Fourth, we will make significant efforts to enhance transaction efficiency in the restructuring market. Currently, payment instruments available for restructuring are quite diverse, including cash, shares, and convertible bonds. Moving forward, the CSRC will support listed companies in using payment instruments such as installment issuance of shares and convertible bonds, staged payment of transaction prices, and phased supporting financing based on specific transaction needs. This will further improve transaction flexibility and fund use efficiency. Simultaneously, we will establish a simplified review procedure for restructuring, significantly streamlining the process, shortening review timeframes, and improving efficiency for eligible listed companies.
In addition, the role of intermediary agencies is crucial in driving mergers and acquisitions (M&As) and corporate restructuring. The CSRC will guide securities firms and other intermediary agencies to further enhance their service capabilities and fully leverage their expertise in trade matchmaking and professional services to help listed companies implement high-quality M&As and restructuring. The CSRC will also properly fulfill its supervisory duty in accordance with the law, cracking down on all violations of laws and regulations, effectively safeguarding market order in enterprise restructuring and ensuring orderly restructuring processes to protect the lawful rights and interests of small- and medium-sized investors.
This concludes my response. Thank you.
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