China eases M&A rules for listed firms

BEIJING, July 11 Fri Jul 11, 2014 8:03am EDT

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BEIJING, July 11 (Reuters) - China is making it easier for listed companies to buy, sell or swap their assets, its latest attempt to streamline bureaucracy and encourage mergers and acquisitions, the country's securities watchdog said on Friday.

Under the new rules, listed firms no longer need the regulator's approval when buying, selling or swapping assets, as long as such deals are not conducted for back-door listings, the China Securities Regulatory Commission (CSRC) said in a statement on its website.

The new rules will also allow financial markets to play a bigger role in the pricing of new shares.

New shares issued for mergers and acquisitions will reflect the market's demand in their pricing, and companies will have to release their peers' price-to-earnings and price-to-book ratios when they are pricing their own shares.

China will also allow listed companies to fund their mergers and acquisitions with a greater variety of financing instruments, such as preferred stocks or private placements of convertible bonds.

"Amending the merger and acquisition rules is in response to the cabinet's call to cut red tape and promote mergers. It is one of the important changes in economic structural adjustments," the CSRC said.

It also scrapped a requirement for a minimum value of shares that must be sold by small- and medium-sized companies when they are financing their mergers and acquisitions.

The rules were released on Friday as a draft reading, though the final version is unlikely to be revised. (Reporting by Aileen Wang; Editing by Nick Macfie)

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