CHINA Law and Practice Contributed by: Shuting Qi, Han Kun Law Offices
4.3 Hurdles to Stakebuilding In China, statutory thresholds are mandatory and can - not be waived or modified to make them less stringent by contractual agreement or corporate bylaws, forcing bidders to strictly pace stakebuilding to avoid prema - ture disclosure and regulatory penalties. Aside from disclosure hurdles, additional hurdles include the negative lists and national security review, industry-specific approvals such as those in the finan - cial or telecoms sector, SAMR merger control filings where turnover thresholds are met, and the require- ment for approval from the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) for transfers involving state- owned listed companies. 4.4 Dealings in Derivatives Dealings in derivatives are permitted in China, provid - ed they comply with the regulatory framework estab - lished under the PRC Securities Law, the PRC Futures and Derivatives Law, and relevant exchange rules. While no dedicated derivatives regulation is currently in force, the CSRC published draft Derivatives Trad - ing Supervision and Administration Measures for comments in January 2026, which, if enacted as pro - posed, would complement the rules on derivatives dealing and internal control and compliance require - ments for derivatives business operators. 4.5 Filing/Reporting Obligations In China, investors holding equity-linked derivatives must comply with disclosure and filing obligations under both securities laws and competition laws. Securities Disclosure Obligations Under Article 85 of the Takeover Measures, investors must aggregate their derivative positions with their direct shareholdings when calculating disclosure thresholds. Specifically, the calculation shall take the higher of (i) shares held, or (ii) shares held plus shares
subject to notification, the SAMR considers factors including voting rights entrustment, concerted action and other contractual relationships. If derivative posi - tions, together with other holdings, confer material influence and turnover thresholds are met, a pre- closing notification to the SAMR is mandatory. 4.6 Transparency Upon crossing the 5% threshold, investors must dis - close their holding purpose and whether they intend to increase or decrease their holdings in the next 12 months in an equity change report. Specifically, investors that come to hold 5% or more but less than 20% of a listed company’s issued shares must disclose their core holding purpose and wheth - er they intend to further increase their stake in the next 12 months in a simplified equity change report. For those that come to hold 20% to 30% of issued shares, a detailed report is mandatory, which addi - tionally requires full disclosure of 12-month follow-up plans for the target’s assets, business, governance structure and articles of association, alongside clearer statements of control intent. For listed companies in China, mandatory disclo - sure is triggered when a potential transaction con - stitutes price‑sensitive material information. An initial approach or preliminary contact does not by itself require disclosure. Pursuant to Article 25 of the Measures for the Admin - istration of Information Disclosure of Listed Compa - nies, disclosure of material information is also required at the earliest of: • when the board adopts a resolution in relation to the transaction; • when the parties sign a letter of intent or definitive agreement; or • when directors or senior management become aware of the material event. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal
underlying convertible securities. Merger Control Filing Obligations
Under Article 5 of the Provisions on the Review of Concentrations of Undertakings, when assessing whether a transaction constitutes a concentration
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