Measures for the Administration of Strategic Investment Made by Foreign Investors in Listed Companies (2024 Revision)

Measures for the Administration of Strategic Investment Made by Foreign Investors in Listed Companies (2024 Revision)

Order of the Ministry of Commerce of the People's Republic of China, the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the State Taxation Administration, the State Administration for Market Regulation, and the State Administration of Foreign Exchange
(No. 3 [2024])

The Measures for the Administration of Strategic Investment Made by Foreign Investors in Listed Companies, which have been deliberated and adopted at the 13th executive meeting of the Ministry of Commerce on August 15, 2024 and approved by the China Securities Regulatory Commission, the State-owned Assets Supervision and Administration Commission of the State Council, the State Taxation Administration, the State Administration for Market Regulation, and the State Administration of Foreign Exchange, are hereby issued and shall come into force on December 2, 2024.

Wang Wentao, Minister of Commerce
Wu Qing, Chairman of the China Securities Regulatory Commission
Zhang Yuzhuo, Director of the State-owned Assets Supervision and Administration Commission of the State Council
Hu Jinglin, Director of the State Taxation Administration
Luo Wen, Director of the State Administration for Market Regulation
Zhu Hexin, Director of the State Administration of Foreign Exchange
November 1, 2024

Measures for the Administration of Strategic Investment Made by Foreign Investors in Listed Companies

Article 1 These Measures are developed in accordance with the Foreign Investment Law of the People's Republic of China, the Securities Law of the People's Republic of China, and other applicable laws and regulations for the purposes of promoting high-level opening up, intensifying efforts to attract and utilize foreign investment, introducing overseas funds and management experience, improving the governance structure of listed companies, guiding foreign investors in making strategic investment in listed companies in a well-regulated and standardized manner, maintaining the order of the securities market, and protecting the lawful rights and interests of listed companies and shareholders.
Article 2 These Measures shall apply to such activities as foreign investors' acquisition and medium- to long-term holding of A-shares of listed companies (“strategic investment”) through the private placement of new shares by listed companies, agreement-based transfer, tender offer, and other methods prescribed by the laws and regulations of the state.
Article 3 For the purposes of these Measures, “foreign investors” means foreign natural persons, enterprises, or other organizations.
For the purposes of these Measures, “listed companies” means A-share listed companies.
Article 4 The strategic investment shall follow the following principles:
(1) It shall comply with the laws and regulations of the state and shall not endanger national security or public interest.
(2) It shall adhere to the principles of openness, fairness, and impartiality, protect the lawful rights and interests of listed companies and their shareholders, accept the supervision of the government and the public, apply Chinese laws, and be subject to the judicial and arbitration jurisdiction of China.
(3) It shall make medium- to long-term investment, maintain the normal order of the securities market, and shall not engage in speculation.
(4) It shall not obstruct fair competition or exclude or restrict competition.
Article 5 A foreign investor shall not make strategic investment in a listed company that falls within the prohibited investment fields specified in the negative list for foreign investment access. When a foreign investor makes strategic investment in a listed company that falls within the restricted investment fields specified in the negative list for foreign investment access, it shall comply with the equity requirements, requirements for senior executives, and other special administrative measures for restrictive access specified in the negative list.
Article 6 A foreign investor shall meet the following conditions:
(1) A foreign enterprise or any other organization is formed and engages in operations in accordance with the law, has sound finance, good credit standing, and mature management experience, and has a sound governance structure and good internal control rules, and standardized business operation. A foreign natural person shall have the corresponding risk identification and bearing capacity.
(2) The total amount of real assets shall not be less than 50 million US dollars or the total amount of real assets under management shall not be less than 300 million US dollars. If a foreign investor becomes the controlling shareholder of a listed company, the total amount of real assets shall not be less than 100 million US dollars or the total amount of real assets under management shall not be less than 500 million US dollars.
(3) It has not received any criminal punishment or major punishment imposed by the domestic or overseas regulatory authority in the past three years; and if the enterprise or any other organization has been formed for less than three years, the period shall be calculated from the date of formation.
If the total amount of real assets of a foreign enterprise or any other organization or the total amount of real assets under the management thereof fails to meet the conditions specified in subparagraph (2) of the preceding paragraph but is wholly owned by the investor (foreign natural person, enterprise, or any other organization that wholly owns the aforesaid entity) that meets the conditions specified in the preceding paragraph, strategic investment may be made in accordance with these Measures. In this case, the investor wholly owing the entity shall make an undertaking or agree with the foreign enterprise or any other organization to jointly assume responsibility for the relevant investment acts.
Article 7 Where a foreign investor makes strategic investment in a listed company with the equity held by it in an overseas company or new shares issued by it as the means of payment, the investor shall also meet the following conditions:
(1) The overseas company is formed in accordance with the law and there is a sound corporate legal system at the place of its registration, and the overseas company and its management have not received any major punishment imposed by the domestic or overseas regulator in the last three years. If the strategic investment is made through agreement-based transfer, the overseas company shall be a listed company.
(2) The foreign investor lawfully holds the equity of the overseas company and is able to transfer such equity in accordance with the law, or the foreign investor lawfully issues new shares.
(3) It complies with relevant provisions of the Securities Law of the People's Republic of China, the Company Law of the People's Republic of China, and relevant provisions of the State Council, the securities regulatory authority of the State Council, the stock exchange, and the securities depository and clearing institution.
(4) It complies with relevant provisions of the state on the administration of foreign investment and has completed relevant formalities.
Article 8 Where a foreign investor makes strategic investment, the foreign investor and the listed company shall retain a financial advisory institution, sponsor, or law firm (hereinafter collectively referred to as the “intermediary”) registered in China in accordance with the provisions of the Securities Law of the People's Republic of China to serve as an advisor.
If the strategic investment is made through the private placement of new shares by a listed company, the intermediary engaged by the foreign investor shall conduct due diligence on whether such strategic investme......