SHANGHAI, June 16 China has specified ownership
limits for overseas investors buying shares in companies listed
in China via the recently announced Hong Kong-Shanghai
cross-border stock investment pilot programme.
According to rules published by the China Securities
Regulatory Commission (CSRC) over the weekend, a single foreign
investor cannot hold more than 10 percent of a company listed on
a mainland exchange. The programme is set to launch in October.
The maximum combined holdings of all foreign investors in a
single Chinese listed firm will be 30 percent, the CSRC
announced, but added that these limits do not include stakes
held by strategic investors.
The regulations did not define what it meant by "strategic
investors" but in China the term is ordinarily used to
describing long-term investors, many of whom typically have
their shares subject to a lock-up period extending several
The CSRC published a draft of the regulations in May to seek
public opinion. The announcement over the weekend means that
rules have now been finalised.
China announced in April that it would allow cross-border
stock investment between Shanghai and Hong Kong in a step
towards opening China's capital account and also letting Chinese
individuals buy foreign equities overseas.
The programme will allow foreign individuals to buy Chinese
stocks directly for the first time, although the selection is
restricted mostly to dual-listed shares and index heavyweights.
Currently, only selected foreign institutions are permitted
to trade Chinese equities through mutual funds operating under
the Qualified Foreign Institutional Investor (QFII) programme or
the similar, yuan-denominated RQFII scheme (the R stands for
renminbi, the official name of China's currency).
Among other restrictions, the CSRC said in the rules that
cross-border trading can only be conducted in the exchanges.
"Any securities service firms, houses and brokers must not
privately provide matching for such transactions," the regulator
said in the new rules published in its website, www.csrc.gov.cn.
"They must also not use any other forms to transfer stocks
outside the exchanges, unless specially permitted by the CSRC."
The regulations come into effect immediately, it said.
(Reporting by Lu Jianxin and Pete Sweeney; Editing by Kim