Regulator streamlines M&A process

The China Securities Regulatory Commission will simplify the review process for major asset restructuring programs and takeovers of listed companies, the market regulator said in a statement on Friday.

Listed companies will no longer need CSRC approval for major asset restructuring programs, except in the case of backdoor listings.

Such listings involve acquisitions of companies that already trade on stock exchanges by enterprises that don't qualify for listings on their own.

There's an exception to this rule. If a listed company plans to acquire assets by using its own shares, it will still need CSRC approval.

The regulator also said that listed companies no longer need to provide profit forecasts when they acquire assets.

The requirements for backdoor listings are the same as those for initial public offerings, and no listings by purchasing shell companies will be allowed on the ChiNext board, China's Nasdaq-style market.

"To protect investors, we'll monitor companies' information disclose and strengthen regulations," said Deng Ge, a spokesman for the CSRC.

Separately, the CSRC announced that it will no longer review takeover bids of listed companies, a move that it said will lower the acquisition cost for bidders.

Bidders will also get more choices of methods to provide performance security for takeover bids.

As an alternative to posting a performance bond, acquiring companies can also offer guarantees from banks or other financial entities, said the statement.

The State Council announced rules in March and May to improve the merger and acquisition process for companies.

Li Daxiao, chief economist at Yingda Securities Co Ltd, said the statements on major asset restructuring programs and takeovers of listed companies provide clear guidance.

The CSRC also announced rules on Friday establishing a shelf registration system for public mutual fund issues. Effective Aug 8, fund firms need only register with the agency to issue new products.

The regulator will step up its oversight of fund firms to ensure that they're complying with the regulations, and it will enforce compliance and implementation to protect investors' interests.

The CSRC said it will complete all registration processes for products within 20 days after the required documents are submitted.

"For complicated and innovative products, the CSRC may ask fund managers to offer more materials" including those on technical preparations for risk control, the new rules said.

The regulator will also increase penalties for fund firms engaging in irregularities.

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