The Split Share Structure Reform, "price" Effect Discussed

With a view to carrying out the Guidelines on Promoting Reform, Opening-up and Steady Development of China's Capital Market (No.3 [2004] the State Council), (the"Guidelines") and addressing the problem of listed companies split share structure, the China Securities Regulatory Commission (CSRC) issued the Circular on Issues relating to the Pilot Reform of Listed Companies Split Share Structure on April 29th,2005.The pilot reform of listed companies split share structure (the"Pilot Reform") was formally initiated. The Pilot Reform shall be carried out in accordance with the basic principle set out in the Guidelines----"Approaches towards this problem (listed companies split share structure) shall conform to the way the securities market works, promote the smooth functioning and development of the securities market, and provide effective protection for investors, especially, the public investors". Practice policies for the Pilot Reform include Sustained Development of Securities Market, Fairness and Uniformity of Rules, Adequate Negotiation in Developing the Reform Plan, Approval for the Reform Plan by Floating Shareholders, and Gradual Implementations.The pilot projects on share mergers first bring forward the word"consideration". Non-tradable shares holders obtain the the right to trade through payment of consideration in various ways in share-trading reform,such as in a method of payment of cash,in a method of scrip issue or reduction of shares,in a method of issuing call warrants or put warrants, in a method of presenting the shares formed from the shares or dividends increased or distributed with a listed company's capital reserve to holders of tradable shares, in a method of contributing high-quality assets to a listed company, exempting the listed company's debts, or assuming debts on behalf of the listed company, in a method of promise. It is a beneficial...