In a move to inject funds into China's social security system and support an aging population, the State Council recently reached a decision requiring specific listed companies to transfer a portion of state-owned shares to the National Social Security Fund.
|The State Council recently reached a decision requiring |
specific listed companies to transfer a portion of state-owned
shares to the National Social Security Fund.
The measure applies to 131 state-controlled companies that have listed on the domestic stock market after reforms introduced in 2005, their current market capitalization is nearly 64 billion yuan. The policy also applies to companies that will list in the future.
Shares transferred to the NSSF must amount to 10 percent of the total in the initial public offering. The move was part of an effort to finance the social security system and the retirement of the aging population.
The NSSF would not only inherit the lock-up period of the transferred shares but extend the period by another three years. The extended lock-up period would boost investor confidence and aid the long-term stable and healthy development of the securities market.
Li Daokui, Professor of Tsinghua University said "The State Council's new rule is of great significance. It solves a long-term problem of the trading of non-tradable shares. The non-tradable shares should be delivered to a fund that needs and must have long-term investment. Now the country's transfer policy is in line with this concept. This is a piece of good news for the long-term sound development of the country's capital market."
The Ministry of Commerce said the NSSF would be entitled to trade the equities and retain any gains after the shares were transferred. However, it would not have the right to interfere in the companies' operations. The Ministry also said it would arrange for audits of the fund's use of the shares.
Editor: Xiong Qu | Source: CCTV.com