Lawful guidelines for insolvency administration of NEEQ-stated corporations

Companies detailed on China’s Countrywide Equities Exchange and Quotations (NEEQ), usually recognized as the “New 3rd Board”, are viewed as unlisted community companies. So the query arises: What provisions or regulatory necessities should insolvency directors be worried about when they enter individual bankruptcy, or its ancillary proceedings, owing to economical issues?

Individual bankruptcy

Contrary to outlined businesses on the Beijing, Shanghai and Shenzhen stock exchanges, NEEQ-mentioned firms do not have the status of a statutory stated corporation, which indicates that evaluate treatments beneath the Minutes of the Symposium on the Demo of Circumstances concerning Personal bankruptcy Reorganisation of Shown Businesses do not apply.

But the individual bankruptcy reorganisation of an unlisted general public organization still considerations the curiosity of investors, lenders and lots of other functions. So if an asset transaction in individual bankruptcy reorganisation fulfills the requirements for a major asset restructuring, the administrator really should improve its interaction and collaboration with securities regulators and inventory exchanges to prevent quoted providers from abusing the technique.


NEEQ-stated businesses in the midst of reorganisation, settlement or liquidation need to use to the NEEQ to suspend transfer of the company’s inventory. If main asset restructuring is concerned, the company really should also use to the NEEQ for a suspension of transfer long lasting no far more than one month.

Furthermore, if a restructuring program or reorganisation report simply cannot be disclosed inside of the suspension period of time, the business may perhaps apply to hold off the resumption of transfer, as long as the suspension interval – accounting for equally phases of the suspension – does not include up to extra than two months.


NEEQ-mentioned firms might concern preference shares in personal, in accordance to posting 8 of the Condition Council’s Guiding Viewpoints on the Start of the Choice Share Pilot.

Wang Zhenxiang
Jingtian & Gongcheng

In individual bankruptcy proceedings, holders of choice shares take pleasure in diverse house distribution legal rights and voting rights from collectors and holders of ordinary shares. They are entitled to be inferior to normal creditors’ rights, but nevertheless have precedence in the distribution of business attributes over standard shareholders.

Neither the Business Personal bankruptcy Legislation nor the over-described guiding thoughts clarify voting rights of desire shareholders in individual bankruptcy proceedings. However, looking at that insolvency is a major corporate matter, the author believes – in juxtaposition to mergers, spinoffs, dissolutions or alterations of company sorts – that desire shareholders really should be granted voting legal rights steady with the team of contributors in proceedings, and that their shareholding need to be calculated between that of the contributors.


Underneath NEEQ details disclosure regulations for quoted organizations, insolvency administrators and their members are viewed as disclosure obligors, in addition to the corporations on their own. Therefore, they are responsibility-bound to disclose, in a timely and truthful way, vital facts that may perhaps materially impact the price tag of quoted securities or investors’ choices, making sure the disclosed info is real, accurate and full.

Disclosure of key facts in the media may not precede disclosure on the specified details disclosure system beneath the Securities Law. An information and facts disclosure doc must very first be well prepared and sent to the chief company broker for uploading to the details disclosure system.

The administrator should really actively co-work with the quoted enterprise, main agency broker and securities company vendors in the disclosure of facts. In situation of any major modifications to insolvency administration matters, the administrator need to instantly notify the chief agency broker and disclose as needed.


Facts disclosure is contained in periodic and advert hoc experiences. In periodic studies, yearly reports should be ready and disclosed within 4 months just after a fiscal year ends, and interim experiences inside two months of the economic 12 months midpoint.

In which important, quarterly stories should really be organized and disclosed within 1 month right after the 3rd and ninth thirty day period of the money yr. The first quarterly report must not be issued right before the yearly report for the past year.

Advertisement hoc experiences, on the other hand, generally protect important updates and events. The administrator need to immediately disclose applicable plans and development: when the board of administrators or supervisors information a resolution when a letter of intent or arrangement is signed or when the directors, supervisors or senior management come to be informed, or need to be knowledgeable, of any impending major event.

For gatherings nonetheless to consider place, the disclosure should emphasis on objective and present facts, with well timed updates of foreseeable future development.

If the quoted corporation enters liquidation proceedings, a possibility warning announcement really should be designed at the very least every five transfer days. This is different from the “once per month” requirement for companies detailed on the Shanghai and Shenzhen exchanges.


Significant advancement of a subsidiary has equivalent excess weight to that of the keeping organization during personal bankruptcy proceedings. When a subsidiary experiences a main advancement that may well materially have an effect on the safety cost or investment decision determination, the administrator ought to duly disclose details linked to the two the keeping corporation and subsidiary.

In addition, resolutions created at creditors’ conferences, after ratified by a court ruling, should really be disclosed in the same manner as shareholders’ conference resolutions. Quoted companies need to set up their individual facts disclosure management system, pursuing which the administrator must appoint a head of info disclosure in cost of linked issues.

The NEEQ disclosure procedures do not evidently condition irrespective of whether a quoted corporation ought to disclose any pre-reorganisation proceeding.

Having said that, with pre-reorganisation remaining a important transitional link among out of court restructuring and in-court docket reorganisation – with its success or failure owning a major impact on the subsequent reorganisation method – the writer believes that “other challenges that may perhaps guide to a reduction of the capacity to go on as a heading concern” under facts disclosure really should be deemed. Therefore, the quoted organization should instantly make a disclosure on entering pre-reorganisation.

Wang Zhenxiang is a lover at Jingtian & Gongcheng


Jingtian & Gongcheng

Place 3001, Area A, China Sources Tower
No.1366 Qianjiang Street, Hangzhou 311500, China

Tel: +86 571 8992 6523

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E-mail: [email protected]