June 17, 2024

Saluti Law Medi

Rule it with System

Legal tips for insolvency administration of NEEQ-stated organizations

Companies shown on China’s National Equities Exchange and Quotations (NEEQ), if not identified as the “New 3rd Board”, are deemed unlisted general public organizations. So the question occurs: What provisions or regulatory specifications ought to insolvency administrators be concerned about when they enter individual bankruptcy, or its ancillary proceedings, because of to fiscal challenges?

Personal bankruptcy

In contrast to stated firms on the Beijing, Shanghai and Shenzhen stock exchanges, NEEQ-outlined providers do not have the status of a statutory stated enterprise, which means that evaluation processes under the Minutes of the Symposium on the Demo of Instances concerning Bankruptcy Reorganisation of Stated Companies do not use.

But the bankruptcy reorganisation of an unlisted general public company continue to concerns the fascination of investors, collectors and quite a few other functions. So if an asset transaction in personal bankruptcy reorganisation satisfies the requirements for a major asset restructuring, the administrator need to fortify its interaction and collaboration with securities regulators and stock exchanges to prevent quoted corporations from abusing the course of action.


NEEQ-stated businesses in the midst of reorganisation, settlement or liquidation ought to implement to the NEEQ to suspend transfer of the company’s inventory. If main asset restructuring is involved, the enterprise must also apply to the NEEQ for a suspension of transfer long lasting no additional than one particular month.

Moreover, if a restructuring strategy or reorganisation report can not be disclosed in just the suspension period, the enterprise might use to delay the resumption of transfer, as extensive as the suspension interval – accounting for both phases of the suspension – does not incorporate up to much more than two months.


NEEQ-outlined businesses might challenge preference shares in private, according to post 8 of the Point out Council’s Guiding Viewpoints on the Launch of the Choice Share Pilot.

Wang Zhenxiang
Jingtian & Gongcheng

In personal bankruptcy proceedings, holders of choice shares delight in distinctive residence distribution rights and voting rights from collectors and holders of regular shares. They are entitled to be inferior to regular creditors’ legal rights, but nonetheless have priority in the distribution of company homes over everyday shareholders.

Neither the Business Individual bankruptcy Legislation nor the previously mentioned-talked about guiding thoughts explain voting legal rights of choice shareholders in personal bankruptcy proceedings. Nonetheless, contemplating that insolvency is a major company issue, the creator believes – in juxtaposition to mergers, spinoffs, dissolutions or modifications of company types – that desire shareholders really should be granted voting legal rights consistent with the team of contributors in proceedings, and that their shareholding need to be calculated amongst that of the contributors.


Beneath NEEQ data disclosure policies for quoted providers, insolvency directors and their associates are thought of disclosure obligors, in addition to the organizations them selves. Thus, they are duty-bound to disclose, in a timely and honest method, critical data that might materially influence the selling price of quoted securities or investors’ choices, ensuring the disclosed info is accurate, accurate and comprehensive.

Disclosure of crucial facts in the media might not precede disclosure on the designated information disclosure platform under the Securities Legislation. An facts disclosure doc should initially be geared up and shipped to the chief agency broker for uploading to the information disclosure platform.

The administrator must actively co-function with the quoted business, main agency broker and securities services providers in the disclosure of information. In case of any important variations to insolvency administration matters, the administrator need to promptly notify the chief agency broker and disclose as needed.


Info disclosure is contained in periodic and advert hoc stories. In periodic reviews, annual stories must be well prepared and disclosed in four months just after a money 12 months ends, and interim reviews inside of two months of the financial year midpoint.

Exactly where needed, quarterly stories should really be prepared and disclosed in just one month following the third and ninth month of the financial 12 months. The to start with quarterly report must not be issued in advance of the once-a-year report for the earlier yr.

Advert hoc reports, on the other hand, predominantly address major updates and activities. The administrator really should immediately disclose relevant strategies and development: when the board of directors or supervisors files a resolution when a letter of intent or settlement is signed or when the directors, supervisors or senior management come to be knowledgeable, or need to be conscious, of any impending key party.

For situations nonetheless to get position, the disclosure really should target on goal and present points, with well timed updates of foreseeable future development.

If the quoted corporation enters liquidation proceedings, a threat warning announcement should really be made at minimum just about every five transfer times. This is distinctive from the “once for each month” prerequisite for companies stated on the Shanghai and Shenzhen exchanges.


Important improvement of a subsidiary has equal excess weight to that of the keeping organization in the course of bankruptcy proceedings. When a subsidiary activities a key progress that may perhaps materially have an affect on the stability price or investment determination, the administrator should really duly disclose information similar to equally the keeping organization and subsidiary.

In addition, resolutions made at creditors’ meetings, at the time ratified by a court docket ruling, really should be disclosed in the exact same fashion as shareholders’ conference resolutions. Quoted firms really should established up their personal information and facts disclosure administration technique, adhering to which the administrator really should appoint a head of details disclosure in cost of connected issues.

The NEEQ disclosure procedures do not obviously state irrespective of whether a quoted enterprise must disclose any pre-reorganisation proceeding.

Even so, with pre-reorganisation remaining a crucial transitional url in between out of courtroom restructuring and in-court reorganisation – with its success or failure acquiring a significant influence on the subsequent reorganisation method – the creator believes that “other risks that may direct to a decline of the potential to keep on as a going concern” below facts disclosure should be thought of. Hence, the quoted corporation must instantly make a disclosure on coming into pre-reorganisation.

Wang Zhenxiang is a lover at Jingtian & Gongcheng


Jingtian & Gongcheng

Space 3001, Space A, China Means Tower
No.1366 Qianjiang Highway, Hangzhou 311500, China

Tel: +86 571 8992 6523

Fax: +86 571 8992 6501

E-mail: [email protected]