Caixin
Jun 15, 2020 07:30 PM
FINANCE

Securities Regulator to Make It Easier to Invest in Brokerages

China’s securities watchdog is set to relax requirements for major shareholders of brokerages.
China’s securities watchdog is set to relax requirements for major shareholders of brokerages.

China’s securities watchdog is looking to relax qualification requirements for major shareholders of securities firms, lowering the threshold for investment.

On Friday evening, the China Securities Regulatory Commission (CSRC) published a set of draft amendments (link in Chinese) to regulations on securities companies’ shareholding, relaxing requirements for their “major shareholders.”

Under the new draft rules, “major shareholders” would include anybody that holds at least 5% of the equity in a securities firm, revised from “shareholders who hold at least 25% of equity in a securities firm or the largest shareholder who holds at least 5% of equity.”

Despite broadening the definition of major shareholders, the CSRC plans to significantly lower barriers to buy into securities firms, lowering or removing a number of requirements for such major shareholders. They would be no longer be required to be industry leaders, have experience in related finance business, or maintain sustained profitability for the past three consecutive years. They would need to have net assets of “no less than 50 million yuan ($7 million),” adjusted down from “no less than 200 million yuan.”

The CSRC also intends to simplify requirements for financial audit reports of shareholders and compliance documents of shareholders and their controlled institutions.

A major brokerage’s compliance director told Caixin that to some degree, the revisions will benefit small and midsize securities firms, easing their access to outside investment.

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Gavin Cross (gavincross@caixin.com)

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