Backdoor listing will be "equivalent" to IPO to review mergers and acquisitions and tighten supervision

At the second sponsor representative training meeting held recently in 2016, the relevant responsible person of CSRC clarified the latest five directions of M & A and reorganization supervision policy for the first time, among which,"high-quality M & A and reorganization application exemption, directly to the M & A and reorganization review meeting; stipulate backdoor listing and IPO 'equivalent' review; introduce preferred shares and directional convertible bonds, support financial advisers to provide M & A financing, support M & A fund development; Strengthen information disclosure" and other policies are included.

Original title: Backdoor listing review tightening in the future will be "equivalent" with IPO

merger and reorganization supervision tightening has become the industry consensus expectation, policy will be in what way? Become the most concerned topic in the market.

The reporter was exclusively informed that at the recently held 2016 second sponsor representative training meeting, the relevant person in charge of the CSRC for the first time clarified the latest five directions of the merger and reorganization regulatory policy, among which,"high-quality merger and reorganization application exemption, directly on the merger and reorganization review meeting; the provision of backdoor listing and IPO 'equivalent' review; the introduction of preferred shares and directional convertible bonds, support for financial advisers to provide merger financing, support for the development of merger funds; strengthen information disclosure" and other policies are included.

Recently, there have been news of stricter supervision of mergers and acquisitions, and this insurance training is the first time that the regulatory authorities have conveyed the direction of merger and reorganization supervision transformation in written form.

Core points:

1. Backdoor listing is becoming stricter, clearly stipulating that backdoor listing and IPO "equivalent" review.

2. After the completion of merger and reorganization, if the shareholding ratio of actual controller or controlling shareholder increases, the old shares held shall also be locked for 12 months.

3. Support financial advisers in providing M & A financing.

4. The supervision level is studying innovative payment methods for merger and reorganization, introducing preferred shares and directional convertible bonds, etc.

5. Apply for exemption from high-quality merger and reorganization, and directly go to the merger and reorganization review meeting.

On

May 26, the regulatory authorities held the second phase of the 2016 series of training courses for sponsor representatives of securities companies (M & A topics) in Hefei City. The first training session was held in Beijing in mid-May.

Participating in the second phase of training, a listed securities trader in East China told reporters that the training lasted for one and a half days. The training subjects included "interpretation of regulatory policies on mergers and acquisitions of listed companies, introduction of merger and acquisition policies in Hong Kong, legal issues and case studies on cross-border mergers and acquisitions of listed companies, audit issues of overseas underlying assets, cross-border mergers and acquisitions of Chinese enterprises, sharing of innovative cases of M & A business, matchmaking and negotiation skills of M & A" and other contents.

Another participant in the training of listed securities firms in South China Baodai told reporters, In the training meeting, From the CSRC listed company supervision department training officials clear "M & A reorganization regulatory framework" The latest five directions:

First, Strengthen information disclosure, Weaken substantive review. The training official made it clear that the review concept of M & A transactions gradually changed from the substantive judgment of pricing and transactions in the past to deregulation, especially for the industrial integration after full game between all parties to the transaction, its core supervision concept is information disclosure. By perfecting the game mechanism of the company, the participation rights of minority shareholders in the process shall be brought into play to ensure procedural justice in the pricing and transaction process.

Second, the process is simplified, the approval is divided into channels, and the approval efficiency is improved. The training official revealed that for merger and reorganization applications involving multiple licenses, a "one-stop" approval will be implemented, that is,"external acceptance once, internal cooperation division of labor, centralized meeting once, approval of an approval document"; merger and reorganization approval will implement a separate system, that is,"high-quality merger and reorganization application exemption, directly to merger and reorganization review meeting, further reducing the review cycle."

Third, support mergers and acquisitions, reorganization and innovation, and improve mechanism arrangements. The official revealed that the regulatory authorities are studying innovation in M & A and reorganization payment methods, introducing preferred stocks and directional convertible bonds, etc.; improving market-oriented pricing mechanisms, increasing pricing flexibility, broadening financing channels, supporting financial advisers to provide M & A financing, supporting the development of M & A funds, and improving the M & A financing environment.

Fourth, classified review, backdoor listing tightening, has clearly stipulated backdoor listing and IPO "equivalent" review.

Fifth, improve the transparency of merger and reorganization review. Since October 15,2012, the CSRC has disclosed the basic information and review progress of M & A and reorganization applications to the public, and updated them weekly; thereafter, it has disclosed the review opinions of the M & A and Reorganization Committee, improved the above forms, increased the time for receiving materials, fed back the reply time, and strengthened the process control.

In response to the impact of the change in M & A and reorganization regulatory policies on the market, the training official said to dozens of representatives at the training site that the positive significance of M & A and reorganization policy adjustment lies in promoting market development, improving marketization level, reducing transaction costs, improving M & A performance, strengthening corporate governance and encouraging market innovation.

"However, there may be some problems in the future, such as 'avoiding shell borrowing, false restructuring, market manipulation, insider trading, inflated pricing, unrelated transactions' and so on still need to be paid close attention to."

Shen Meng, executive director of Xiangsong Capital, said in an interview with Chinese reporters from securities firms that the latest five directions of M & A and reorganization supervision also directly reflect the changes in regulatory thinking, mainly reflected in: one is not to engage in "one-size-fits-all" and refine classified management; Second, encourage M & A and reorganization, but control water injection risks through strengthening valuation transparency; Third, substantially change the focus of supervision, with information disclosure as the goal and safeguarding the rights and interests of small and medium-sized investors as the principle; Fourth, by changing the focus of supervision, we will carry out system construction, reduce artificial factors and prevent large fluctuations in the stock market.

"After the new chairman took office, the regulatory policy has indeed changed. The first is to highlight the perfection of the system, the second is to like classified management, the third is to focus on information, and the fourth is to protect the interests of investors and crack down on crimes in the capital market." Shen Meng told reporters.

Supporting financing old shares locked for one year

The above-mentioned participation in the training of South China listed securities brokers Baodai revealed to reporters, In addition to clear five policy directions, The supervision layer this training also specially emphasized, Require to participate in supporting financing actual controller or controlling shareholders, Merger and reorganization after the implementation of the shareholding ratio increased, In the original fixed increase of new shares need to lock 36 months provisions, The old shares also promised to lock 12 months.

"In fact, this corrects the content of the first training." The insurance agent said, And the first phase of training content is different, This time clear supporting financing old shares locked for one year, And only after the completion of merger and reorganization after the shareholding ratio increased, The actual controller or controlling shareholders held old shares need to promise to lock for 12 months.

It is reported, The supervisor had pointed out in the first phase of training,"Require to participate in the fixed increase of the actual controller or controlling shareholders, Once the number of new shares, Even if due to fixed increase and diluted shareholding ratio, In the original fixed increase new shares need to lock 36 months regulation, The old shares also promised to lock 12 months."

The insurance analysis said, After the regulatory level makes the above adjustment, Future major shareholders to merger and acquisition of those real growth prospects of the target, Rather than to merger and acquisition of those good concept of the target,"This is also equivalent to delaying the arbitrage time of major shareholders."

"Refinancing is definitely tightening." The insurance agent "spit out" said, Due to frequent policy adjustment, The company's investment banking business is quite affected,"Originally in May can complete the project, Now will not be completed until the third quarter or even the fourth quarter."

According to the calibre approved by China Securities Regulatory Commission, there were 106 new merger and reorganization projects in A shares in the first quarter of 2016, and 408 new merger and reorganization projects in A shares in 2015. The mergers and acquisitions of listed companies in manufacturing industry, TMT, wholesale and retail and real estate industries were the most active.

Editor: Nancy