CSRC announces rules for preferred company shares

The China Securities Regulatory Commission released on Friday rules for a pilot program allowing companies to issue preferred shares. It opens the way to raise funds and establish a multi-level capital market.

"The trial of preferred shares is a great innovation in the Chinese capital market and plays an important role in deepening reform," said Zhang Xiaojun, a spokesman at CSRC.

Three types of listed companies can publicly issue preferred shares: Shanghai Stock Exchange 50 index members (the largest by market capitalization); companies planning to acquire other listed companies by issuing preferred shares for payment; companies buying back common stock that plan to decrease their registered capital by issuing preferred shares as payment.