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Buy back a new chart to understand! The scale of repurchase, use, reduction of restrictions, etc. are clearly "improper arbitrage" is blocked

January 11, 2019 22:03
source: Securities Times Network

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  RepurchaseThe new rules are coming!

On January 11, the Shanghai and Shenzhen Stock Exchanges officially issued the “Detailed Rules for the Repurchase of Listed Companies” and decided to implement them from the date of publication.

Compared with the previously published draft for comment, the “Regulations” improve the repurchase of the sale of shares, strengthen the restrictions on the reduction of special rights during the repurchase period and the information disclosure obligations, and regulate the changes in the use of repurchased shares, etc. Fudge-style repurchase, and also made corresponding arrangements for the convergence of old and new rules.

  Improve the sale of repurchased shares to prevent the company from "improper arbitrage"

Previously, the "Company Law" was amended to add new companies to maintain the company's value andshareholderThe rights are repurchased, and it is pointed out that the shares repurchased to maintain the company's value and shareholders' rights may be sold through centralized bidding after fulfilling the pre-disclosure obligations in accordance with the conditions and procedures stipulated by the stock exchange.

However, the market is concerned about the institutional arrangements for the repurchase of shares that can be sold. It is believed that this practice may hide the arbitrage space, which will cause the company to buy low and sell high, and to raise problems such as manipulating stock prices and earning stocks.

  In this regard, the “Regulations” of the Shanghai and Shenzhen Stock Exchanges have imposed stricter restrictions on the sale of repurchased shares through the secondary market. The main ones are:

The holding period expires 12 months;

The sensitive information window period shall not be reduced;

Restriction on the number of reductions: The daily reduction of the number of shares shall not exceed 25% of the average daily volume of the 20 trading days before the pre-disclosure date, except for the daily reduction of the number of shares not exceeding 200,000 shares; The number of shares shall not exceed 1% of the total share capital;

Reduction of the price declaration limit: the declared price shall not be the price limit of the company's stock trading on the day of the decline;

Pre-disclosure: Pre-disclosure of reductions before 15 trading days of initial sale of shares;

“Speak first”: The shares repurchased to maintain the company’s value and shareholders’ equity are intended to be used for future concentrated auction sales. The company must clarify when the repurchase plan is disclosed, otherwise it may not be changed for sale thereafter;

Use of capital reduction: The company is required to use the funds from the reduction of the company's main business;

Reduction of time limit: It is not allowed to make a reduction declaration within the trading day of the opening bid, the half hour before the closing, and the trading price without the price limit.

The Shanghai Stock Exchange said that the repurchase to maintain the company's value and shareholders' rights is a "semi-passive" repo in a special case, which is different from the repurchase in other situations. Allowing the sale of the repurchased shares under this circumstance can provide them with more flexible market-oriented means, which will help these companies to better balance the capital repurchase and production and operation capital requirements in an emergency. Try to encourage the necessary system for share repurchase.

In addition, according to the relevant provisions of the “Accounting Standards for Business Enterprises”, the repurchase, sale or cancellation of shares should be treated as changes in equity, and the fair value of equity instruments should not be recognized. If the proceeds from the sale of the repurchased shares of the company are higher than the original repurchase cost, the difference shall not be included in the current profit and loss and shall be included in the capital reserve as an equity transaction. Therefore, it is not easy for the company to manipulate stock prices and arbitrage by selling the repurchased shares.

  Covering specific subject reductions? Exchange no

  For the special shareholders such as Dong Jiangao, the controlling shareholder, and the shareholders holding more than 5% of shares, during the repurchase period, the Shanghai and Shenzhen transactions have made two requirements:

First, if the company repurchases the company's value and shareholders' equity, its director, the controlling shareholder, the actual controller, and the repurchase share proposer shall issue the repurchase result and the shares from the date of the company's first disclosure of the repurchase of shares. changeannouncementDuring the period, the shares of the company may not be directly or indirectly reduced.

The second is to further strengthen the information disclosure obligations of major shareholders holding more than 5% of shares during the repurchase period, requiring the company to disclose to the directors of the company, the controlling shareholder, the actual controller, The proponent and shareholders holding more than 5% of the shares ask whether there is a specific situation of the reduction plan, and fully reduce the risk according to the response.

  Prevent "fudge" repo

Considering that the company law amendment decided to extend the holding of the repurchased shares to three years, there is an objective need for the listed company to change the use of the repurchased shares. The “Repurchase Rules” of the Shanghai and Shenzhen Stock Exchanges allow the company to have a legitimate cause, and the contents of the repurchase program can be changed as required. However, it is necessary to explain the rationality, necessity and feasibility of the change or termination, and the possible impact on the company's debt performance, ability to continue operations and shareholders' equity.

  At the same time, the exchange also added a “negative list” of changes in the use of repurchased shares. Specifically, it includes two major aspects:

First, if the repurchase shares are to be used for cancellation, they may not be changed to other purposes;

Second, if the repurchased shares are intended for future sale, they shall be clearly defined and disclosed at the outset, otherwise they may not be sold.

  The convergence of old and new rules: the new rules apply

  In order to ensure the smooth implementation of the "Repurchase Rules", the relevant arrangements for the rules and regulations for the application of the rules of the Shanghai and Shenzhen Stock Exchanges are made for the connection arrangements for the new and old rules:

First, the rules for clear stock repurchase of shares are applicable. If the repurchase plan disclosed before the implementation of the Repurchase Rules has not been implemented, the general regulations, implementation procedures and information disclosure requirements of the repurchase implementation shall be applied when the implementation of the new regulations is continued.

The second is to give the listed company a specific repurchase purpose for the three-month time to clear the stock repurchase plan. Before the implementation of the Repurchase Rules, many repurchase programs disclosed by listed companies included multiple uses but did not specify the specific circumstances. In order to clarify market expectations, the company should specify the number of shares or the total amount of funds to be repurchased for each purpose within 3 months.

(Article source: Securities Times Network)

                (Editor: DF142)

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