Firms face cuts in business in china
FORTY Chinese mainland-listed companies may have their daily trading limits halved starting on Monday as they failed to meet a deadline to convert non-tradable shares, industry sources said yesterday.
Eighteen Shanghai-traded and 22 Shenzhen-listed companies will be subject to a trading ceiling of five percent per day, down from 10 percent currently, people familiar with the matter said.
The two mainland bourses over the weekend approved the latest batch of 32 companies to join in the shareholding reform, which was initiated in May 2005 to make all stocks at mainland-listed firms tradable.
Under regulatory arrangement, controlling stake holders must compensate minority investors with shares, cash or warrants in exchange for the right to float their previously locked ownership.
So far, about 97 percent of 1,300-odd mainland-listed companies have participated in the share overhaul, which regulators had hoped to finish by the end of last year.
Authorities have said companies escaping the stock conversion won’t be allowed to raise additional funds or conduct any new businesses in the capital markets.
Sources said yesterday there’s still a possibility for some of these 40 firms to be exempted from lower trading limits if they can rush to gain the regulatory nod for the share conversion by Monday.
But they also noted companies would face a 10 percent trading limit if they missed the stockholding reform deadline.
The Shanghai and Shenzhen bourses said in late December that firms which don’t join the reform face being eliminated from major benchmark indexes.
The offending companies will also be subject to a different price-bidding system from other listed firms, the two bourses said, without specifying.