China's top securities regulator said in Beijing on Monday that the reform on non-tradable shares introduced recently aims at eliminating trading rights differences between non-tradable and tradable shares, not at floating all non-tradable shares on the stock market. 

"Making all shares tradable doesn't mean selling all shares," said Shang Fulin, chairman of China Securities Regulatory Commission (CSRC).

After the non-tradable shares become tradable, whether they would come into circulation or not depends not only on the shareholders, but also on other relevant restrictions, Shang added.

He clarified the restrictions as follows: first, the entire strategic layout of state-owned sectors. After the reform on non-tradable shares is completed, state-owned shares can be cashed in only upon the approval of the State-owned Assets Supervision and Administration Commission (SASAC).

Second, the intention of controlling shareholders.

The SASAC recently released guidelines on the Reform on Non-tradable Shares of State-controlled Companies, which specifies the allowed proportion of state-owned shares in state-controlled companies - in line with national economic restructuring plans - as well as the need to facilitate a sound development of the capitals market.

Shang said that reforms will be gradual, following the principle of "pilot companies go first and others gradually follow suit." Reforms involving the first batch of pilot companies have met with preliminary success, he added.

He added that the reform on non-tradable shares is not "at any cost" as some might have suggested. "Instead, it will be carried out on the judgment of the overall and long-term benefits arising from the reform," he said.

Transparency in stock market reform promised

Shang promised that more efforts would be adopted to promote transparency and to stop insider trading.

He said that reform is a very complicated issue. The CSRC will take all related issues into consideration when formulating reform rules and regulations, including the reform of companies that have both A and B shares listed on the mainland stock market and H shares listed on the Hong Kong bourse.

(Xinhua News Agency June 28, 2005)