Consulting on IPO and transfer of State capital in the form of book building

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The draft includes 36 articles on IPO procedures for the State-owned enterprises

The draft includes 36 articles guiding on the procedures for IPO of State-owned enterprises in accordance with the Government’s regulations on the capital transfer of 100% invested State-owned enterprises and one-member limited liability companies into Joint Stock Companies in the form of book building; stock capital transfer of the State and State-owned enterprises invested in other enterprises in the form of book building.

Book building is a process of creating, receiving and recording an investor’s demand for shares to effectively identify the price for the issuance of stock to the public, including the initial issuance and additional issuance to the public.

Shares sold in the form of book building in the equitization plan include: Shares sold for strategic investors; shares sold for public and for professional securities investors. In which, the number of shares sold to the public shall be at least 20% of the enterprise’s share capital; the specific rate shall be decided by the representative office of the owner in the equitization plan in the form of book building.

The Draft stipulates that the price range of book building is identified from the lowest price rate as the starting price, to the highest price rate equal to the starting price plus 20%. The representative office of the owner shall decide on the specific price range of book building in the plan for the sale of shares by the book building method.

Principles for determination of distribution prices: The competent authorities shall decide on the principles for determining the distribution price of shares at the selling prices to strategic investors or selling prices to public investors.

Specifically, the first case is identifying shares distribution price under the selling price to strategic investors.

The distribution price is determined based on order book of the strategic investor. The distribution price is used as a basis for distribution of shares to public investors and professional securities investors.

If the distribution price can not be determined on the basis of order book of the strategic investor, due to that there is no investor registering, the distribution price is determined based on the public investor order book. The distribution price shall be used as the basis for distribution of shares to investors in accordance with the approved investor structure.

If the distribution price can not be determined based on the order books of strategic investor and public investor due to that there are not any investors registering, the distribution price to professional securities investors (including issuance-underwriting organization) shall be the lowest of the offering price range.

The second case is identifying the distribution price of shares under the selling price to public investor.

The distribution price is determined based on the order book of the Public Investor. The distribution price is used as the basis for distributing shares to strategic investors and professional securities investors.

If the distribution price can not be determined based on the public investor order book due to the lack of registered investors, the distribution price shall be determined based on the strategic investor order book. The distribution price shall be used as the basis for distributing shares to investors in accordance with the approved investor structure.

If the distribution price can not be determined based on the order books of strategic investor and public investor due to that there are not any investors registering, the distribution price to professional securities investors (including issuance-underwriting organization) shall be the lowest of the offering price range.

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In addition, the application of distribution principles on the basis of selling price, for the number of shares ordered at the distribution price that is higher than the total number of shares offered for sale at that price, the determination for investors given priority is in ordering time.

For the information announcement, the draft stipulates that at least 20 working days before the opening day of the order book, the Steering Committee for equitization and equitized enterprises must coordinate with the equitization consultancy organization and issuance-underwriting organization to officially implement requirements on information announcement on the mass media and publicize it on the Government’s website.