"Taking multiple measures to invigorate the mergers and acquisitions (M&A) and reorganization market, we will also release six measures to promote M&A and reorganization," said Wu Qing, Chairman of the China Securities Regulatory Commission (CSRC), at a press conference held by the State Council Information Office on the morning of September 24.
In response to a reporter's question, Wu Qing further stated that M&A and reorganization are indeed significant events in the capital market.
Supporting corporate M&A and reorganization to further promote the effective allocation of resources is a very important function of the capital market.
Especially against the backdrop of the accelerated global industrial transformation and the accelerated economic structure upgrading in China, it is urgent to play the key role of corporate M&A and reorganization to help with industrial integration and improve quality and efficiency.
On the evening of September 24, according to the information on the CSRC's official website, to further stimulate the vitality of the M&A and reorganization market, the CSRC, based on extensive research, has formulated the "Opinions on Deepening the Reform of the M&A and Reorganization Market of Listed Companies" (hereinafter referred to as the "M&A Reform Opinions"), adhering to the market-oriented direction and better playing the role of the capital market as the main channel in corporate M&A and reorganization.
The main content includes: first, supporting listed companies to transform and upgrade in the direction of new quality production forces; second, encouraging listed companies to strengthen industrial integration; third, further increasing regulatory tolerance; fourth, improving the efficiency of reorganization market transactions; fifth, enhancing the service level of intermediary institutions; and sixth, strengthening regulation in accordance with the law.
The "M&A Reform Opinions" propose to establish a simplified review procedure for reorganization, for listed companies to absorb and merge with each other, and for high-quality companies with a market value of more than 10 billion yuan and a continuous two-year evaluation of A-level information disclosure quality to issue shares to purchase assets (not constituting a major asset reorganization), streamlining the review process and shortening the review and registration time.
On the same day, the two major stock exchanges in Shanghai and Shenzhen also issued announcements stating that they plan to revise the "Rules for the Review of Major Asset Reorganizations of Listed Companies" (hereinafter referred to as the "Reorganization Review Rules"), and will publicly solicit opinions in synchronization with the "M&A Reform Opinions".
It is understood that the "Reorganization Review Rules" consist of nine chapters and eighty-eight articles.
This revision adds a special section on the simplified review procedure in Chapter Five, and has also made adaptive adjustments to some other individual provisions.
The specific content is as follows: (1) Clarify the applicable situations of the simplified review procedure.
The scope of application includes two types of transactions: one is the share-for-share absorption and merger between listed companies, and the other is the high-quality listed companies issuing shares to purchase assets without constituting a major asset reorganization.
High-quality listed companies refer to those with a total market value of more than 10 billion yuan and a Shenzhen Stock Exchange evaluation of A-level information disclosure quality for the past two years.
(2) Establish a negative list for the simplified review procedure.
First, listed companies or their controlling shareholders, actual controllers, intermediary institutions, or their related personnel have been subject to administrative penalties from the CSRC or disciplinary sanctions from the trading venue within a certain period, or there are other major breaches of trust; second, the transaction plan has major unprecedented, major public opinion, and other major complex situations.
(3) Regulate the related mechanisms of the simplified review procedure.
For reorganization transactions that meet the conditions of the simplified review procedure, the stock exchange accepts them based on the verification opinions of intermediary institutions within 2 working days, and issues review opinions within 5 working days after acceptance.
The stock exchange reorganization review institution does not conduct review inquiries, and there is no need to submit this transaction to the reorganization committee for deliberation.
(4) Strengthen the responsibilities of all parties in the simplified review procedure.
Listed companies and their related parties should make a commitment that this transaction meets the requirements for the application of the simplified review procedure.
The responsibilities of intermediary institutions for verification and control should be tightened, and independent financial advisors should issue a clear and affirmative verification opinion on whether this transaction meets the requirements for the application of the simplified review procedure.
At the same time, to avoid the abuse of the simplified review procedure, the stock exchange strengthens post-event supervision of related reorganization transactions, and if violations of the relevant regulations of the simplified review procedure are found, they will be dealt with severely according to the relevant regulations.
Since 2024, the enthusiasm for M&A and reorganization of A-share listed companies has been continuously heating up.
A research report by Wanlian Securities pointed out that the number of A-share reorganization projects has increased year-on-year in 2024.
As of September 13, 2024, according to Wind data, a total of 153 reorganization events have been disclosed by all A-share listed companies this year, involving 136 reorganization projects, with the number of projects increasing by 13.33% compared to the whole year of 2023.
Wanlian Securities pointed out that emerging industries have become the main targets of M&A, and central and state-owned enterprises have been active in M&A and reorganization: as of September 13, from the disclosed reorganization projects, the top five industries of the targets in the Shenwan first-level industry are electronics, computers, social services, pharmaceuticals and biological, and power equipment, with the number of companies being 16, 16, 10, 9, and 7 respectively, accounting for 46.40%.
Among the disclosed reorganization projects since 2024, there are 26 companies that have become state-controlled enterprises after reorganization and acquisition by central and state-owned enterprises, mainly distributed in the basic chemical industry, transportation, and national defense military industry.
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