On May 27, the China Securities Regulatory Commission (CSRC) released the Interim Administrative Measures for Shareholding Reduction by Shareholders of Listed Companies (the "Measures") and the Administrative Rules for Equity Shares of a Listed Company Held by Its Directors, Supervisors and Senior Management Personnel and the Related Changes (Revised in 2024). Both regulations took effect immediately upon release. The Measures introduce several key provisions: (1) Stringent regulation of shareholding reduction by major shareholders; (2) Prevention of disguised shareholding practices; and (3) Enhanced liability provisions for violations. Notably, the Measures prohibit  controlling shareholders and actual controllers from reducing their shareholdings through centralized bidding or block trading under specific circumstances, such as when stock prices fall below the issuance price or net asset value, or when dividend standards are not met. Additional key points include:(1) Introduction of pre-disclosure obligation for major shareholders before their reduction of shareholdings through block trading; (2) Requirement for both major shareholders and their concert parties to adhere to shareholding reduction restrictions. Meanwhile, the Measures provide  that in the case of illegal shareholding reduction, shareholders can be ordered to repurchase and pay the price difference to the listed company. The Measures also specify circumstances warranting penalties and strengthen the obligations of listed companies and board secretaries.

(Source: China Securities Regulatory Commission)