(This article appears courtesy of International Financial Law Review, sign up for a free trial on their site)
As readers may recall, the Chinese government implemented the non-tradable share reform in late 2006. In a nutshell, the reform consisted of converting non-tradable shares in PRC listed companies (which were mostly state-owned) to become tradable on the PRC stock market. To obtain the shareholders’ approval needed for such conversion, holders of non-tradable shares would offer compensation to public holders of tradable shares who would suffer from the increase in liquidity.
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