The Supreme People’s Court and the China Securities Regulatory Commission (CSRC) jointly issued the Minutes of the Symposium on the Effective Trial of Cases concerning the Bankruptcy Reorganisation of Listed Companies on 31 December 2024.
On 14 March 2025, the CSRC released the Guidelines No. 11 for the Regulation of Listed Companies – Matters Relating to the Bankruptcy Reorganisation of Listed Companies.
On the same day, the Shanghai and Shenzhen Stock Exchanges updated and issued their respective self-regulatory guidelines on bankruptcy reorganisation.
Designed to adapt to new developments in the capital markets, this new framework aims to facilitate risk resolution and quality improvement, refining judicial rules and the government-court co-ordination mechanism.
Rule updates
Senior Partner
Dacheng Law Offices
Tel: +86 10 5813 7019
E-mail:
meili.gao@dentons.cn
Share pricing and lockups. The updated framework set a floor for reorganisation share purchase prices at 50% of the market benchmark. For investors and persons acting in concert to acquire control of a listed company, a 36-month lockup period applies. For non-controlling investors, the lockup period is 12 months. Where ultimate control remains unchanged, controlling shareholders, actual controllers and persons acting in concert face a 36-month lockup.
Proportion and source of capital reserve conversions. Under the new regulations, the capitalisation issue ratio is capped at a maximum of 15 new shares per 10 existing shares. The amount of capital reserve available for conversion must be determined with reference to the latest audited report – be it annual, interim or quarterly.
The framework also specifies rules and requirements on the dual-line reporting of materials, the role of reorganisation investors, protocols for confidentiality and information disclosure, and the recognition of debt restructuring gains.
Practice features
Public searches and analysis reveal that in 2025 a total of 21 listed companies applied for, or were subjected to, pre-reorganisation proceedings (including out-of-court reorganisations). Of these, courts accepted reorganisation petitions for 15 companies and approved reorganisation plans for 15.
This period, marking the first complete year under the new regulatory framework, saw listed company reorganisation demonstrate several distinct features, notably:
Rise in investment entry prices. The new regulations impose a floor price of no less than 50% of the market reference price for reorganisation investors, particularly industrial investors, alongside tiered lockup period arrangements. This aims to curb short-term arbitrage and steer capital towards long-term industrial value.
Accordingly, in approved reorganisation cases during 2025 (excluding cases initiated under the previous regime), the share acquisition price for investors consistently met or exceeded this 50% threshold.
Enhanced information disclosure for ordinary creditor debt-for-equity swaps. As stipulated in the above-mentioned minutes, schemes using this method must specifically justify that the equity conversion price objectively reflects the stock’s fair market value, and the calculated repayment ratio is reasonable.
To comply, most of the 15 listed companies with reorganisation plans that were approved in 2025 bolstered their justifications.
They typically obtained share valuation analyses from financial advisers or specialised assessment reports on the swap from appraisal bodies to substantiate the fairness of the price and the repayment ratio, thereby improving the transparency and credibility of the pricing process.
Greater emphasis on industrial development and upgrading. The new regulations stress that reorganisation should refocus on core operations, aiming for high-quality growth through substantive improvements in business capabilities.
In response, the operational proposals of reorganisation schemes approved in 2025 have progressed beyond mere debt relief and cost cutting, evolving into comprehensive, long-term strategies for industrial advancement and strategic transformation.
Heightened complexity and caution signalled by longer pre-reorganisation timelines. The new regulations impose stricter prerequisites such as a clearer identification of reorganisation value, and the need to resolve historical issues like fund misappropriation and illicit guarantees.
This shift is mirrored in the procedural timeline. In 2024, 67% of accepted reorganisation cases commenced pre-reorganisation within the same calendar year; by 2025, the figure dropped to about 30%.
The trend suggests more thorough and prudent assessments – evaluating reorganisation feasibility and core asset risk resolution – at an earlier stage.
Reorganisation practices also indicate several other trends, namely: the valuation of secured assets is shifting from liquidation value to future value; efforts to institutionalise government-court collaboration are deepening; investor bases are growing more varied, with financial investors increasingly prominent; and resolutions for fund misuse and illegal guarantees are becoming stricter.
Key takeaway
The year 2025 was the first full year that listed companies put the new reorganisation rules into practice. Both statistics and individual cases demonstrate a clear shift towards fundamental value restoration.
Moving forward, with ongoing revision of the Enterprise Bankruptcy Law and further refinement of supportive frameworks such as the government-court co-ordination mechanism, this balanced approach – prioritising fairness, efficiency and substantive rescue – is expected to become a key institutional driver in improving listed company standards and sustaining capital market vitality.
Gao Meili is a senior partner at Dacheng Law Offices. She can be contacted by phone at +86 10 5813 7019 or by e-mail at meili.gao@dentons.cn
