SSE introduces new rules to regulate the use of surplus funds

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SSE introduces new rules to regulate the use of surplus funds
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On 31 October, the Shanghai Stock Exchange published the Issues Regarding Regulating the Use and Management of Surplus Funds by Listed Companies Notice. The Notice came into force on the date of its publication and governs the use of surplus funds which were raised after that date, or had been raised but not yet utilized on that date. According to the Notice, surplus funds are defined as that portion of net funds raised that exceeds the amount of funds that it was planned to raise. Surplus funds must be utilized and managed pursuant to the following rules.

Procedures for use of funds

General procedures: the board of directors of a company will consider and approve the way in which funds may be used. After the independent directors, supervisors and sponsors of the company have presented their opinions, the board will fulfil its relevant information disclosure obligations.

Special procedures: if the amount of surplus funds used by a listed company in a single transaction or on a cumulative basis within a 12-month period reaches RMB100 million (US$15.8 million) or accounts for 10% or more of the net funds raised, this must be considered and approved at a general meeting of shareholders (remote voting via the internet should be available). The company must also fulfil its relevant information disclosure obligations.

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