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2.3.2. Cash Option Required in Stock Offer with Delisting Purpose 43
2.3.3. Disposal of Remaining Shares 43
2.4. Stock Offer Through ‘Bridge’ Arrangement: The Precedent
Deal Dongfang Electric (600875.SH) – Dongfang Boiler
(600786.SH) 44
2.5. Delisting Risk Resulted From A General Offer 46
2.6. Solutions to Retrieve the Public Floating 52
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Table of Contents
Chapter 3
Negotiated Transfer and Indirect Takeover 53
3.1. Introduction 53
3.2. The CSRC Approval and Key Regulations 54
3.3. Correlation with the Offer 55
3.3.1. Triggering of the Acquiror’s Mandatory Offer Obligation 55
3.3.2. Choice between General Offer and Partial Offer in
Negotiated Transfer and Indirect Takeover 56
3.3.3. Revision to a Transfer of 30% or Less Plus
a Partial Offer 60
3.4. Deal Structures of Indirect Takeover 63
3.4.1. Indirect Takeover Approaches 63
3.4.2. Acquisition of Equity Interests in the ListCo’s
Shareholder 64
3.4.3. Merger of Acquiror’s Subsidiary with the ListCo’s
Shareholder 64
3.4.4. Corporate Separation of the ListCo’s Shareholder 68
3.4.5. Indirect Takeover through Contractual Arrangements 68
3.5. Disclosure of The Deal 71
3.5.1. Acquiror’s Disclosure Obligation in Negotiated
Transfer/Indirect Takeover 71
3.5.2. Exceptions to the General Application of the
Takeover Report 72
3.5.3. Contents of the Takeover Report 73
3.5.4. Simplified Disclosure Obligation of the Seller 74
3.6. Possible Sgm Approval Requirement 75
3.7. The Procedures Step by Step 76
3.8. Protection of Public Interests 80
3.8.1. Stringent Implementation of the Disclosure in
Indirect Takeover 80
3.8.2. Clearance Duty of Former Controlling Person 81
3.8.3. Activities Restricted during the Transition Period 81
3.8.4. Post-closing Transfer Restrictions 82
Chapter 4
Exemption of Offer and the 2% Creeper 83
4.1. Introduction 83
4.2. Situations Eligible for Exemption 84
4.3. Application Procedures 87
4.4. Exemption In Controlling Shareholder’s Creeper 90
4.4.1. Regulatory Framework and Definition of the Creeper 90
4.4.2. The Creeper Increasing Procedures Step by Step 92
4.4.3. The Creeper Procedures in Practice 95
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Table of Contents
4.4.4. Trading Restrictions during the Creeper Period 97
4.4.4.1. Increasing-Forbidden Periods 97
4.4.4.2. Lock-Up Undertaking 97
4.4.4.3. Implications of Short-Swing Trading 97
4.5. The Options if no Exemption Granted 98
4.6. The Options if no Exemption Application Submitted 104
Chapter 5
Change of Interests 107
5.1. Introduction 107
5.2. Disclosure of the Deal 108
5.2.1. Points Triggering the Disclosure Obligation 108
5.2.2. Short Form or Detailed Change Report 110
5.2.3. The Disclosure in Special Contexts 111
5.2.4. Contents of the Change Report 113
5.3. Trading Restrictions during the Disclosure Period 114
5.4. Procedures of the Change Deal 115
5.4.1. Procedural Variations Depending on the
Change Approach 115
5.4.2. Application Documents 117
Part II
Takeover in Particular 121
Chapter 6
Transfer by State-Owned Shareholder (SS) 123
6.1. Introduction 123
6.2. The SASAC Approval and Key Regulations 124
6.3. Trading of SS Shares on Secondary Market 126
6.3.1. Record Filing with Provincial or National SASAC
or Approval by National SASAC 126
6.3.2. Price Limitation for Block Trading 127
6.4. Negotiated Transfer of SS Shares 128
6.4.1. Approval by National SASAC 128
6.4.2. Pricing Basis: Mean VWAP of Last Thirty Trading Days 128
6.4.3. The Procedures of Negotiated Transfer of SS Shares
Step by Step 129
6.5. Indirect Transfer of SS Shares 135
6.5.1. Deal Structure 135
6.5.2. Dual Approval System 135
6.5.3. Pricing Basis: Valuation Result in Light of the
Stock Price 137
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Table of Contents
6.5.4. The Procedures of Indirect Transfer
of SS Shares Step by Step 138
6.6. Special Rules in the Transfer of Financial SS Shares 143
6.6.1. Overview 143
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