Securities law changes boost transparency
The National Assembly passed an amended Law on Securities on November 24. The amended law expands the definition of securities to include "investment capital contribution contracts" and more clearly defines "share purchase rights", and "separate offers of securities". It also allows the services of "securities investment consultancy" and "securities investment portfolio management" to be offered by companies other than a securities company or fund management company.
Under the new law, a public company which conducts a separate offer must meet three conditions: (1) a decision approved by the general meeting of shareholders or the board of management; (2) shares or convertible bonds will be issued subject to a restriction on transfer for one year from the date of completion of the issue; and (3) a tranche of shares or convertible bonds must be six months apart from a previous tranche.
The new law also stipulates specific cases under which transactions must be made through a public offer, as well as the transactions subject to extraordinary disclosure requirements. To further promote the transparency of the securities markets, the amended law also adjusts "provisions on warning" (Article 74 of the existing law) to "provisions on warning and financial safety".
The new law takes effect on July 1, 2011.
Lawyers of Bizconsult Law Firm
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