Our reporter Wu Xiaolu

On April 15, the Shanghai Stock Exchange solicited opinions from the public on the recently drafted “Shanghai Stock Exchange’s business guidelines for public offering of infrastructure securities investment funds (REITs) - newly purchased infrastructure projects (for Trial Implementation)” (hereinafter referred to as the “guidelines for newly purchased infrastructure projects”).

In order to further promote the pilot of public offering of infrastructure securities investment funds (REITs) and give better play to the function of public offering of REITs, under the guidance of the CSRC, the Shanghai Stock Exchange studied and drafted the guidelines for newly purchased infrastructure projects and defined the relevant mechanism arrangements for the raising of REITs. The raising mechanism is an important feature of REITs products and an indispensable link in market construction. The introduction of REITs raising mechanism is conducive to the listed high-quality operators to issue more shares to acquire assets, optimize the investment portfolio, promote M & A activities, and truly realize the long-term strategic value and sustainable development ability of REITs as an “asset listing platform”. Supporting well functioning REITs to become bigger and stronger through the raising mechanism and improving the positive incentive mechanism is also an important way to form a market-oriented survival of the fittest, promote a virtuous cycle of investment and financing and improve the overall market performance of REITs.

The guidelines for newly purchased infrastructure projects is the basic rules of the Shanghai Stock Exchange to regulate and guide newly purchased infrastructure projects and related raising, information disclosure and other matters during the existence of infrastructure funds, and stipulates the important nodes in the whole business process of newly purchased projects, the sale of raised shares and other key matters. The guidelines for newly purchased infrastructure projects formulated by Shanghai stock exchange mainly focus on the following ideas:

First, adhere to the market-oriented concept, take listed companies as a reference model, and emphasize the asset characteristics of REITs. As the main body of asset listing, public REITs are similar to major asset restructuring and refinancing of Listed Companies in terms of newly purchased infrastructure projects and related arrangements for raising and selling, and are quite different from traditional securities investment funds. This guideline fully draws on the relevant practical experience of Listed Companies in the procedures, information disclosure, suspension and resumption of trading and issuance methods of newly purchased infrastructure projects, takes information disclosure as the core, strictly compacts the responsibilities of market subjects such as intermediaries, and highlights the characteristics of REITs’ asset listing platform in relevant links.

Second, clarify market expectations, refer to the relevant requirements of the initial offering, and strengthen information disclosure. The guidelines for newly purchased infrastructure projects are consistent with the initial offering requirements in terms of standards and requirements for infrastructure projects, strategic placement arrangements, due diligence requirements and information disclosure, and take into account the relevant arrangements for the stability of infrastructure fund operation. At the same time, adhere to the principle of “strengthening information disclosure and prudent suspension”, improve the fairness, timeliness and accuracy of information disclosure, limit the suspension time, improve work transparency and clarify market expectations.

Third, in accordance with the principle of emergency first, focus on newly purchased infrastructure projects, and standardize other uses of raised funds. According to the preliminary research, the raised funds during the existence of the infrastructure fund are mainly used for newly purchased infrastructure projects, and there are also other arrangements such as major maintenance and transformation. Considering that the raising of REITs at this stage is mainly used for newly purchased infrastructure projects, this guideline focuses on this specification, and defines the matters that do not purchase assets in raising, which shall be applied with reference to this guideline.

The guidelines for newly purchased infrastructure projects mainly regulate the access conditions, procedural arrangements, information disclosure management, suspension and resumption requirements, offering and pricing arrangements, etc. In terms of access conditions, it is consistent with the requirements of the initial offering as a whole, and focuses on the relevant requirements for the operation stability of infrastructure funds. For example, it is required that the type of purchased projects is basically consistent with the current holding type in principle, the change of holder structure and operation management organization shall not affect the stable operation of the project, and further clarify the qualifications of main participating institutions.

In terms of implementation procedures, it is mainly implemented in accordance with the procedures of “the fund manager decides to purchase the project - fulfill the registration change procedures of the CSRC - obtain the approval of the CSRC - convene the general meeting of holders (if necessary)”. In terms of information disclosure management and suspension and resumption of trading, it clarified the regular disclosure of progress during the purchase of infrastructure projects, and standardized the confidentiality responsibility for sensitive information. Learn from the stock experience and reduce the suspension time through phased disclosure. In principle, the suspension time shall not exceed 10 trading days, and in special cases, it shall not exceed 25 trading days. In terms of offering and pricing arrangements, there are mainly three ways of offering: placing to original holders, public offering and directional offering, which are generally similar to stocks; The inquiry pricing mechanism will no longer be set, which will be determined mainly through the pricing of the manager and the resolution of the shareholders’ meeting. At the same time, in order to protect the interests of investors, the lower limit of offering price is stipulated in public offering and directional offering.

The Shanghai Stock Exchange said that in the next step, under the guidance of the CSRC, the Shanghai Stock Exchange will carefully sort out and study the main modification suggestions put forward by subsequent parties, fully absorb and adopt the useful suggestions, revise and issue the guidelines for newly purchased infrastructure projects to the market as soon as possible. Shanghai Stock Exchange will simultaneously make technical preparations for REITs raising business, promote the implementation of mature REITs raising projects as soon as possible, open up the whole process of REITs business and form a demonstration effect.