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August 26, 2005

China Extends Share Merger Reforms

From Asia Times:

Aug 27, 2005
China goes whole hog on share reforms

Government stock market regulators announced August 24 that the share merger reform would be extended to the whole market, sparking a smart rally on the Shanghai and Shenzhen bourses. Five departments of the national government announced guidelines pushing the reform process ahead, after the pilot projects on share mergers proved successful and were well received by the markets. This prepared the ground for expanding the reform, according to the official circular, which outlines the general direction of the process. The latest reform is the third attempt at share mergers; two previous efforts in 1999 and 2001 failed to address the problem.

According to the circular, the China Securities Regulatory Commission encourages all mainland-listed companies to choose a suitable time to merge their tradable and non-tradable shares. Listed companies which complete the merger would be given priority to raise new capital; and all shares in future initial public offerings will be tradable. However, details of the reform procedures have yet to be revealed to the companies, said Hua Sheng, a well-known economist based in Beijing.

LINK to rest of article

Posted by Becky at August 26, 2005 2:38 PM Posted to Investments/Finance