On May 10, SZSE officially published the Guidance No. 3 on Information Disclosure by Listed Companies – Major Asset Restructuring (hereinafter referred to as the Restructuring Guidance). This is an important measure for SZSE to further implement market-oriented reforms in M&As and restructurings, guide the standardized development of the M&A and restructuring market and release the vitality of market participants required by CSRC.

M&As and restructurings are major ways to optimize the allocation of the stock of resources in the capital market and key means to facilitate the high-quality development of listed companies and accelerate industrial transformation and upgrading. Since 2018, under CSRC’s guidance, SZSE has actively promoted the market-oriented reforms of M&As and restructurings, continuously deepened the "full chain" supervision of M&As and restructurings, and promoted M&As and restructurings to play a more active role in serving high-quality economic development. According to statistics, the total number of M&As and restructurings of the SZSE market was 2,522 last year and the total transaction amount reached CNY1.38 trillion, accounting for 60% and 54% of the whole market respectively and showing a good development trend.

On the basis of the original rules such as the Business Guide No. 10 for Listing Companies – Major Asset Restructuring, Restructuring Memorandum for the SME Board, Restructuring Memorandum for the ChiNext Board, and the Memorandum of Press Briefings of various boards, SZSE published the Restructuring Guidance with the following three goals: first, to further implement CSRC's requirements on market-oriented reforms in M&As and restructurings and promote the effective connection between SZSE rules and higher-level rules; second, to optimize the system of rules for M&As and restructurings and improve the effectiveness level of M&A and restructuring rules; third, to enhance the conciseness and applicability of M&A and restructuring rules and properly integrate and simplify relevant requirements.

The Restructuring Guidance consists of 6 chapters and 64 articles, including general rules, the restructuring planning stage, restructuring related briefings, related matters during administrative licensing reviews (if applicable), restructuring implementation, continuous supervision, and supplementary rules. Compared with the original memorandum, the business guide and the notice, the Restructuring Guidance focuses on both "addition" and "subtraction".

For "addition", the Restructuring Guidance complements the shortcomings of supervision and improves supervision effectiveness. First, it improves the inside information prevention and control mechanism. In order to effectively improve the legal compliance of transactions and prevent market chaos, a special chapter was created in the Restructuring Guidance to regulate the inside information prevention and control mechanism, requiring listed companies and relevant parties to effectively implement the confidentiality responsibility on restructuring matters and timely submit the list of insiders and disclose the report of self-examination on stock trading of insiders at relevant timings. Second, it strengthens the supervision of restructuring implementation and integration effects. For issues of poor integration, failed performance commitments, unfulfilled share compensation obligation and substantial goodwill impairment after M&A and restructuring implementation, the early stages are stressed in the Restructuring Guidance and it is required that the performance compensation agreement shall include compensation execution procedures, guarantee measures and dispute resolution methods. Besides, it requires listed companies to fully disclose the situations of performance commitments, compensation obligation fulfillment and goodwill impairment tests after restructuring implementation. Third, it further clarifies the review procedures and disclosure requirements for the termination of planned restructuring, requirements on trading suspensions/resumptions and information disclosure during the review by the M&A and Restructuring Committee, and SZSE supervision measures.

For "subtraction", the Restructuring Guidance fully integrates and optimizes relevant rules to release market vitality. First, original provisions on trading suspensions/resumptions during restructuring have been deleted. In view of the fact that the current rules for trading suspensions/resumptions have clearly provided for trading suspensions/resumptions during restructuring, the Restructuring Guidance requires listed companies to handle trading suspensions/resumptions during restructuring in accordance with the relevant rules for trading suspensions/resumptions. Second, it simplifies information disclosure requirements and increases verification flexibility. To implement the Information Disclosure Content and Format Criteria No. 26 for Companies of Public offering of Securities – Major Asset Restructuring of Listed Companies (Revised in 2018), it accordingly simplifies requirements for restructuring plan submission materials and disclosure, and increases the flexibility of verification requirements for intermediaries, allowing intermediaries to disclose verification opinions based on their investigation into the actual progress during restructuring planning. Third, it optimizes the arrangements for the restructuring "cold period" and the related briefing mechanism, deletes operational provisions, simplifies some of the provisions that are duplicated with other rules, and enhances the pertinence and effectiveness of the Restructuring Guidance.

During the formulating of the Restructuring Guidance, SZSE adhered to the principle of openness, listened to the opinions of all parties in the market through symposiums, fully absorbed reasonable suggestions from market participants, and amended and improved the Restructuring Guidance accordingly. The amendment mainly includes the cancellation of the mandatory requirements of holding press briefings at SZSE on the restructurings, cancellation of the requirements of submitting commitment documents for the specific measures of addressing diluted earnings per share by relevant responsible entities and restructuring status sheets during restructuring planning. Improvement is made on participant requirements for investor briefings.

In accordance with the requirements of "Four Musts" and "One Joint Force", SZSE adheres to the principles of marketization and rule of law, comprehensively and systematically carries out the adaptive evaluation and revision of the system of rules of self-supervision for information disclosure. The goal is to strive to establish a system of rules with a clear structure and adaptable to innovative development to strengthen the system foundation of front-line supervision. The optimization and integration of M&A and restructuring self-regulatory rules is an important step taken by SZSE in 2019 to integrate and upgrade the systems of rules.