CSRC anti-hostile takeover rules are not legally viable

Author: Brian Yap | Published: 16 Aug 2016

China’s securities regulator has reportedly stepped up its crackdown on suspicious secondary-market fundraising for takeover bids - but the new measures clash with the existing ones.

On July 7 it was  reported that the China Securities Regulatory Commission (CSRC) has issued window guidance, banning capital-raising in the secondary market to fund a potentially hostile takeover.

But counsel in China have questioned the legal viability of the reported guidance, arguing that implementing such measures would require a major overhaul of the existing regime.

"As we don’t know whether such window guidance really exists, it is certain that the regulator would face implementation issues should it decide to introduce it because it would clash with some of the existing rules," said Zhang Rongsheng, partner at Jingtian & Gongcheng in Beijing.

The article claims CSRC has informed investment banks in China of the new measures, which prohibit shareholders holding at...