The Shanghai Stock Exchange ("SSE") has recently formulated and issued, together with the National Equities Exchange and Quotations Co., Ltd. ("NEEQ") and the China Securities Depository and Clearing Corporation Limited ("CSDC"), the Implementing Measures for Private Placement of Convertible Corporate Bonds by Non-listed Companies (the "Measures"), while the Shenzhen Stock Exchange ("SZSE") has also distributed its counterpart measures. Both measures have taken effect immediately from the date of issuance.

Major contents of the Measures touch upon the following six aspects: 1. expanding the scope of issuers and the scope of application; 2. clearly specifying the forms of private placement; 3. clarifying the division of responsibilities and duties among all relevant institutions; 4. making clear the conversion procedures; 5. setting out definite requirements for information disclosure; and 6. providing clarity on the connection with the pilot scheme on convertible bonds offered by innovation-oriented firms and startups. According to the Measures, issuers eligible to offer convertible bonds are joint-stock companies that have not yet been listed on a stock exchange; limited liability companies may refer to the Measures for such private placement. Meanwhile, where convertible bonds are offered in a non-public manner, the number of shareholders of a joint-stock company and of a limited liability company should not exceed the upper limit of 200 and 50 respectively, both before the issuance of convertible bonds and after the conversion.

(Source: Shanghai Stock Exchange, Shenzhen Stock Exchange)