The state Council issued The Provisional Measures on Reducing State Shares to Raise Social Security Funds on June 12. Following is the full text:
Article One. The provisional measures are worked out to improve social security system, explore new ways to raise funds for social security and back up the reform and development of state-owned enterprises.
Article Two. State shares refer to state-controlled shares and state-owned shares of legal persons in listed companies, and reducing state shares mean to transfer these share to the public investors and securities investment funds.
Article Three. The State Council will have all jurisdictions over state shares on behalf of the state.
The accredited representative body of state shares are those units, which hold state shares of the listing companies on behalf of the state.
Article Four. The capital from reduction of state shares will be mandated to the Council of National Social Security Fund.
Article Five. All the share-holding companies (including those listed in overseas stock market) with state shares should sell out 10 percent of its total financing when they make initial public offering and issue additional shares. Those companies established in the latest three years should transfer a certain state shares to the Council of National Social Security Fund, which will be accredited to sell or retail in initial public offering. All capital from sellout of state shares will turn in national social security fund.
Article Six. The price of state share will be decided by stock market in principle.
Article Seven. A state department joint conference will take charge of discussion and implementation of reduction of state shares. These departments include the Ministry of Finance, the State Planning Committee, State Economic and Trade Commission, Ministry of Labor and Social Security, China Securities Regulatory Commission and the Council of National Social Security Fund.
Article Eight. The joint conference is stationed in the Ministry of Finance to handle routine affairs.
Article Nine. Those companies which reduce the state share with the permission of the joint conference should provide the documents as follow:
1) Draft proposal on reduction of state share and consignment agreement;
2) Written promise for hand-in fund on reduction of state shares by accredited representative institute shareholder and main underwriters;
3) Other materials required by the joint conference.
Article Ten. The China Securities Regulatory Commission takes responsibility to make market supervision rules and information issuing of reduction of state shares in listed companies.
Article Eleven. The national social security fund and its council will be established.
Article Twelve. The unit concerned should assign the income from state share reduction to specific account set up by the Ministry of Finance in two days after it receive the income. The Ministry of Finance should transfer the fund to the Council of National Social Security Fund in five days while dealing with the related formalities.
Article Thirteen. The professional investment management institute entrusted to operate the fund must regularly report its performance and revenue to the Council of National Social Security Fund, which will subsequently disclose to the public for supervision.
Article Fourteen. According to the development of securities market and need of social security fund, the joint conference can conduct pilot projects like placing state shares and directional counter-purchasing in a few selected companies. The pilot project should be discussed by the joint conference and submitted to the State Council for ratification.
Article Fifteen. The Ministry of Finance will review contract transfer of state shares in listed companies including non-initiator contract transfer.
Article Sixteen. The measures become effective since its launch.
(CIIC 06/18/2001)
