China Sets New Rules on How Major Shareholders Can Sell Their Stock

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The China Securities Regulatory Commission's headquarters in Beijing. Photo: VCG

China’s top securities regulator has placed new restrictions on how major shareholders of listed companies, as well as members of their leadership, can sell their stock as the watchdog looks to protect the market from instability.

As part of new measures that took effect Friday, the China Securities Regulatory Commission (CSRC) banned controlling shareholders and actual controllers of publicly listed companies from offloading shares through centralized bidding or block trades under certain situations.

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China Securities Regulatory Commission (CSRC) has restricted major shareholders and top executives from selling stock under certain conditions, including when the stock is below IPO price or book value and dividend standards are unmet.
New rules require 15-days notice for planned stock sales and prohibit short-selling through securities borrowing by major shareholders and key company figures.
Violations can lead to penalties, including the need to repurchase sold shares and potential market bans, with even share reductions due to divorce requiring compliance.

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