Name: Provisions on Issues in Relation to the Regulation of the Participation in and Control over Futures Companies (《关于规范控股、参股期货公司有关问题的规定》, the “Provisions”)
Issuing authority: China Securities Regulatory Commission (“CSRC”)
Effective date: 1 June 2008
Subject: Control over and participation in futures companies
The CSRC issued the Regulations for the Administration of Futures Trading, and the Measures for the Administration of Futures Companies on 9 April 2007 to strengthen the regulation of China’s futures industry. The CSRC has issued the Provisions to clarify, for the first time, the regulatory requirements on the participation in and control over futures companies. The Provisions represent the CSRC’s further efforts to prevent improper transactions between futures companies, their controlling shareholders and other affiliated futures companies.
Highlights
- The Provisions stipulate that an entity is permitted to have control over one futures company only and an entity that controls a futures company may not participate in more than one other futures company. Any non-compliance with this restriction must be rectified promptly within two years of the effective date of the Provisions.
- The circumstances under which an entity will be regarded as having control of a futures company include: (1) holding 50% or more of equity interests in a futures company; (2) holding less than 50% of equity interests in a futures company, but with the ability to exert material influence on shareholders’ resolution through voting rights (including negative control) or to determine the appointment of more than half of the directors; (3) having the ability to actually direct the actions of a futures company through investment relationship, agreement or other arrangement, without being a shareholder of the futures company.
- Participation in a futures company means direct equity participation, and indirect equity participation through investment relationship, agreement or other arrangement, in circumstances which do not constitute control over the futures company.
- There are exemptions to the ownership restrictions above. These include: (1) holding less than 5% direct or indirect shareholding in a futures company; and (2) indirect shareholding in a futures company through direct or indirect shareholding in a securities company.
Please contact Zili Shao ( zili.shao@linklaters.com tel: +86 21 2891 1868) or Fang Jian ( jian.fang@linklaters.com tel: +86 21 2891 1858) if you would like further details.
