Authors: Yaohua HU 丨 Xin DU 丨 Yikai WANG 丨 Yunting YE

The PRC Law on Securities (“Securities Law”) and relevant laws and regulations strictly

prohibit the unauthorized issuance of shares to the public (the issuance of shares either to nonspecified

persons or to specified persons which results in the issuer having more than 200

shareholders). In practice, the China Securities Regulatory Commission (“CSRC”) is intently

focused on whether the number of shareholders exceeds 200 upon applying certain shareholder

“look-through” rules. In general, “look-through” means to examine the upstream shareholding

structure of companies or the subscription structure of private equity (“PE”) funds or asset

management plans to determine the ultimate natural person, listed company or State-owned

Assets Supervision and Administration Commission (“SASAC”) investors. The scope of the

look-through rules is an important factor that affects the 200 shareholder threshold

determination, although this concept continues to be ambiguous. By analyzing the relevant

laws, regulations and cases, this article discusses the scope of look-through in determining the

number of shareholders in different types of capital market transactions, including IPOs,

backdoor listings, asset purchases through share issuances (not constituting a backdoor listing),

cash subscriptions for private share placements of A-share listed companies, public issuances

of A-share listed companies (share allotments, additional share issuances), NEEQ listings and

the private placements of NEEQ listed companies.

prohibit the unauthorized issuance of shares to the public (the issuance of shares either to nonspecified

persons or to specified persons which results in the issuer having more than 200

shareholders). In practice, the China Securities Regulatory Commission (“CSRC”) is intently

focused on whether the number of shareholders exceeds 200 upon applying certain shareholder

“look-through” rules. In general, “look-through” means to examine the upstream shareholding

structure of companies or the subscription structure of private equity (“PE”) funds or asset

management plans to determine the ultimate natural person, listed company or State-owned

Assets Supervision and Administration Commission (“SASAC”) investors. The scope of the

look-through rules is an important factor that affects the 200 shareholder threshold

determination, although this concept continues to be ambiguous. By analyzing the relevant

laws, regulations and cases, this article discusses the scope of look-through in determining the

number of shareholders in different types of capital market transactions, including IPOs,

backdoor listings, asset purchases through share issuances (not constituting a backdoor listing),

cash subscriptions for private share placements of A-share listed companies, public issuances

of A-share listed companies (share allotments, additional share issuances), NEEQ listings and

the private placements of NEEQ listed companies. ">Read more...