CSRC to Ease Rules for Major Shareholders of Securities Firms

Source: Regulation Asia Editors, Regulation Asia 2020-06-17

The profitability, net assets and experience requirements have been relaxed for major shareholders of securities companies, effectively enabling firms easier access to outside investment.

The CSRC (China Securities Regulatory Commission) has issued new rules to improve supervision over equity management in securities companies.

The rules are part of measures to implement China’s new Securities Law, which came into effect on 1 March 2020.

Under the draft rules, all shareholders holding more than 5% equity in securities companies will be considered major shareholders, compared to 25% or the largest shareholder holding more than 5% under current rules.

The qualification requirements of major shareholders of securities companies have also been reduced, revoking a requirement for them to have sustained profitability for three consecutive years, and reducing their net assets requirement from CNY 200 million to CNY 50 million. Securities companies will no longer need to have a major shareholder with related experience in a financial business, or to be an industry leader.

In line with the new Securities Law, changes in securities companies’ registered capital, shareholding structure, major shareholders, and actual controllers no longer require CSRC approval. Instead, such changes merely need to be notified to the regulator.

The CSRC also proposes to simplify requirements for shareholders’ financial audit reports and compliance documents.

The rules are expected to significantly ease access to investment for securities companies, particularly for small and midsize firms.

The rules, available here, are open for consultation until 12 July.

CSRC to Ease Rules for Major Shareholders of Securities Firms

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