On 1 November 2024, the Ministry of Commerce, China Securities Regulatory Commission, State-owned Assets Supervision and Administration Commission of the State Council, State Administration of Taxation, State Administration for Market Regulation and State Administration of Foreign Exchange of the PRC jointly released the revised Measures for the Administration of Foreign Investors' Strategic Investment in Listed Companies (hereinafter referred to as Administration Measures), which shall come into effect on 2 December 2024.

Under the Administration Measures, strategic investment refers to foreign investors' acquisition and medium or long-term holding of A-shares of listed companies through the new shares issuance to specific investors, shares transfer by agreements, tender offers, and other methods stipulated by national laws and regulations.

The revised Administration Measures have relaxed the restrictions on foreign investors' strategic investments in listed companies. The major changes are as follows:

1. Foreign nature persons are allowed to make strategic investment in listed companies. Under the previous Administration Measures, only foreign legal entities or other organizations are allowed to make strategic investment.
2. Assets requirement for foreign investor that becomes the non-controlling shareholder is lowered. That is the total actual assets shall be no less than USD50 million or the total actual assets under management shall be no less than USD300 million.
3. Tender offer is added as a new method to make strategic investment. Under the previous Administration Measures the investment methods available are limited to subscription of new shares issued to specific investors and share transfer by agreement.
4. Foreign investors are allowed to use equity interests of non-listed overseas companies as consideration payment for targeted issuance and tender offers.
5. The minimum shareholding ratio requirement for shares transfer by agreement and tender offers is lowered from 10% to 5%, while the shareholding ratio requirement for subscription of new shares issued to specific investors is cancelled.
6. The lock-up period for shares acquired by foreign investors is shortened from 3 years to 12 months. However, if the Securities Law of the PRC, the regulations of the securities regulatory authorities of the State Council, or the rules of the stock exchanges require a longer period of time for the lock-up period of the shares, such specific regulations shall apply.
7. The prior approval procedure of the Ministry of Commerce under the previous Administration Measures is cancelled.

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