CBRC Bans Asset Management, Trust Plans from Serving as Controlling Shareholders


The China Securities Regulatory Commission has outlined three categories of shareholders that will be prohibited from serving as the controlling shareholders or largest shareholders in companies applying for IPO’s on the country’s new third board.

CBRC spokesperson Chang Depeng (常德鹏) said to China Securities Journal that the increase in China’s IPO applications over the past several years had seen contractual privately offered funds, asset management plans and trust plans emerge as key shareholders in newly listed companies.

CBRC is concerned that these “three categories of shareholders” could create problems such as “nested” or “layered” investment, high levels of leverage, lack of transparency with regard to shareholder identity, and increased difficulty of regulatory coordination.

For this reason the regulator has “confirmed policies for companies with such shareholders during the IPO applications for the new third board (National Equities Exchange and Quotation.)

Chief amongst them is a prohibition on any shareholders in these three categories serving as the controlling shareholder, actual controller or largest shareholder in such companies.

CBRC further requires that shareholders in the three categories be included within the purview of effective regulation by China’s financial authorities.

Fu Lichun, (付立春), head of Northeast Securities New Third Board Research Center, said to China Securities Daily that CBRC’s measures directed at the “three categories of shareholders” would be of benefit to A share IPO risk control, as well as of benefit to the growth of NEEQ.