China Stock Turmoil 2015

China stock exchanges to ‘strictly monitor’ stock sales by major shareholders

Shanghai and Shenzhen stock exchanges issue first notice on monitoring of selling activities affecting major stakeholders

PUBLISHED : Wednesday, 13 January, 2016, 11:50pm
UPDATED : Wednesday, 13 January, 2016, 11:50pm

The Shanghai and Shenzhen stock exchanges said they will closely monitor the selling activities by major shareholders and take action where appropriate, according to separate statements issued by the exchanges late Wednesday.

The mainland’s two exchanges issued the statement as part of their ongoing monitoring of share sales by major stakeholders in listed companies, reflecting their first policy on the issue since the China Securities Regulatory Commission (CSRC) announced fresh restrictions on trading by major stakeholders last Thursday.

Since Monday only two major shareholders have conducted share sales and the amount and volume were not material, the Shanghai Stock Exchange said in a statement. The Shenzhen Stock Exchange said only five major shareholders had engaged in selling since Monday and the amount and volume were not material, adding that the scale of block transactions in past three trading days have narrowed compared with the average last year.

A major shareholder is deemed to be one who holds 5 per cent or more of a company’s shares.

“The Shanghai Stock Exchange has taken special measures to enhance regulation. It will closely monitor the stock selling behaviour and focus on the subsequent selling of block trades... and take regulatory measures on any trading behaviour that could hit the market or affect the normal transactions, ”the Shanghai Stock Exchange said.

The Shanghai Composite Index fell 2.42 per cent to close 2,950, reflecting its first close below the 3000-point level since August 26.

Last week the mainland securities regulator announced fresh restrictions on share sales by major stakeholders in listed companies. A six month ban on share disposals by major shareholders was due to expire by the start of trade on Monday.

The new rules cap selling by major shareholders at 1 per cent or less of the company’s total shares every three months, the CSRC announced on its official website on January 7. The new rules took effect from January 9.

Shareholders much also notify the exchange officials of their intention to dispose of shareholders well in advance of the transaction.