China's securities watchdog has released a draft proposal seeking public feedback on revisions to the rules governing listed companies' securities offerings. The proposed changes aim to refine the system for lock-up price placements and strengthen regulatory requirements for convertible bonds.

The China Securities Regulatory Commission (CSRC) is focusing on two key areas regarding lock-up price placements. First, for placements where all subscribers are major shareholders such as controlling shareholders, the pricing benchmark date will be restricted to the "first day of the offering period." Additionally, the lock-up period for shares acquired by investors participating in these placements will be extended from 18 months to 36 months. These adjustments are designed to balance financing efficiency with market fairness, encouraging a shift from lock-up price placements towards more public, auction-based placements.

Second, the threshold for placements by controlling shareholders and actual controllers aimed at supporting the listed company's stable operations will be lowered. Apart from two specific negative conditions that will be retained—unauthorized changes to the use of previously raised funds that have not been corrected or approved by shareholders, and significant legal violations by the controlling shareholder or actual controller in the past three years—other conditions will no longer apply.

Enhanced Oversight for Convertible Bonds

The regulatory framework for convertible bonds is also set for tightening. Firstly, convertible bonds will be subject to the same intervals between refinancing activities as placements, rights issues, and public offerings. Secondly, requirements regarding the issuer's debt repayment capacity for convertible bonds will be strengthened. Thirdly, regulatory disclosure requirements concerning the face value and term of convertible bonds will be formally incorporated into the refinancing rules, reinforcing their foundational role in the regulatory system.