Taihe · Listed Company Securities Compliance Column | How to Determine the Review and Disclosure Standards for “Waiver of Rights” in Transactions
Release Date:
2026-07-14
The high-quality development of the capital market hinges on the compliance foundation of listed companies. As the registration-based system is fully implemented and regulatory frameworks are iteratively refined, securities compliance has become a central pillar for the stable operation of listed firms. Accurately aligning with regulatory guidance and fortifying compliance safeguards are critical enablers for enterprises to navigate market cycles.
To this end, we have established this dedicated column, focusing on the core areas of securities compliance for listed companies: summarizing the key points of new regulatory rules, deconstructing the rationale behind typical enforcement actions, dissecting the essence of court rulings, and thoroughly examining the practical challenges of compliance. Adopting a legal‑professional perspective, we employ clear, pragmatic language and scenario‑based analysis to interpret compliance requirements, map out risk pathways, and provide actionable guidance, helping companies strengthen their internal control systems, mitigate compliance risks, and enhance the effectiveness of their compliance management.
When compliance thrives, enterprises thrive; when compliance is stable, development is stable. We hope this column will serve as a trusted professional partner for listed companies—helping them discern regulatory trends, address compliance challenges, mitigate compliance risks, and strengthen the foundations of sustainable growth—so that together we can foster the sound and healthy development of the capital market.
In the primary‑market investment activities of listed companies, there are generally several approaches, broadly including establishing new entities, increasing capital in existing companies, waiving rights, and acquiring equity interests. Among these, the “waiver of rights” provision is often the most complex to interpret from a legal standpoint for corporate governance departments, frequently leading to uncertainty when determining the thresholds for deliberation and disclosure. Today, we will examine how to assess the deliberation and disclosure standards applicable to “waivers of rights” in practical settings.
I. Definition of Waiver of Rights
First, let us clarify the definition of waiving a right and the circumstances to which it applies. At present, the Shenzhen Stock Exchange has provided a clear definition; although other market segments have not yet issued explicit guidance, they may nonetheless refer to this framework:
Article 61 of “Shenzhen Stock Exchange Self-Regulatory Guidance No. 7 for Listed Companies—Trading and Related Party Transactions”:
For the purposes of this section, “waiver of rights” refers to the act by a listed company, except in cases such as administrative allocation or judicial rulings, of voluntarily relinquishing its rights over its controlled or equity‑participated companies, non‑corporate entities, and other cooperative projects, including the following:
II. Review and Disclosure Standards
The disclosure standards for the review of waivers of rights in each segment are as follows:
Next, after determining—based on the relevant definitions—that the listed company has engaged in a waiver of rights and has reviewed the standards for deliberation and disclosure, we must assess whether the transferee in cases involving pre‑emptive purchase rights or the capital‑increase subscriber in cases involving pre‑emptive subscription rights is an associated party. If so, the transaction must be submitted to the board for disclosure in accordance with the standards applicable to related‑party transactions; if not, it shall be disclosed pursuant to the standards for ordinary transactions. The following sections clarify these distinctions by examining different scenarios:
(1) Waiver of the Right of First Refusal
Example: Company A, the target entity, is a limited liability company. Listed company A holds 60% of Company A’s equity, shareholder B holds 30%, and shareholder C holds 10%. Company A is included in the listed company’s consolidated financial statements. Now, shareholder B intends to transfer 10% of its equity in Company A to an external party for a consideration of RMB 5 million. Listed company A plans to waive its right of first refusal; such waiver will not result in the removal of Company A from the consolidated financial statements.
1. The transferee has no affiliated relationship with the listed company.
Criteria for judgment: ① Since only Listed Companies A and C hold pre‑emptive rights, if the listed company negotiates with Company C to exercise its pre‑emptive right and Company C first waives its right, then Listed Company A will hold a pre‑emptive right of RMB 5 million. If the listed company ultimately decides not to acquire the shares, the corresponding waiver amount would be RMB 5 million, with a resulting change in shareholding ratio of 10%. If both the listed company and Company C agree to waive their pre‑emptive rights simultaneously, the allocation of the pre‑emptive right shall be determined according to their respective shareholding proportions. Accordingly, Listed Company A’s exercisable pre‑emptive share would be 60% / 70% = 85.71% (where 70% represents the combined shareholding ratio of the listed company and Company C), corresponding to a waiver amount of RMB 5 million × 85.71% = RMB 4.2857 million. In summary, to avoid disputes among shareholders, in accordance with the “higher‑of‑the‑two” principle, the waiver amount may be benchmarked against RMB 5 million when assessing relevant metrics; however, if the articles of association of the target company or an explicit agreement among the shareholders provides otherwise, the waiver amount shall be calculated in accordance with such provisions.
② In accordance with the stock listing rules of the Shanghai, Shenzhen, and Beijing stock exchanges, the applicable disclosure standards for waivers of rights shall be assessed by comparing the waiver amount (for the Beijing Stock Exchange, no specific requirement exists; a comparable approach may be adopted) with the listed company’s most recent audited total assets, net assets, or market capitalization. Subsequently, the waiver ratio—corresponding to the two scenarios described in item ①, namely 10% or 8.57% (=10% × 60%/70%), with the stricter threshold set at 10%—shall be determined. The financial data of the target company shall then be compared with the corresponding financial data of Listed Company A, applying Articles 7.1.2/6.1.2 and 7.1.3/6.1.3 of the Stock Listing Rules.
Note: If the scope of consolidated financial statements changes due to the waiver of pre‑emptive rights, the financial metrics of the target company as a whole shall be compared with those of the listed company. If only a portion of the pre‑emptive rights is waived, the same analytical framework outlined above shall apply, with appropriate adjustments made to reflect the waived portion.
2. The transferee has an affiliated relationship with the listed company.
Criteria for judgment: The amount of related-party transactions is compared with the thresholds for related-party transactions stipulated in the Stock Listing Rules of the Shanghai, Shenzhen, and Beijing stock exchanges. If all of the rights and interests relinquished by Listed Company A are transferred to a related party, the related-party transaction amount equals the total relinquished amount of RMB 5 million. If only a portion of the relinquished rights and interests is transferred to a related party, the related-party transaction amount shall be prorated accordingly.
(2) The listed company waives its preemptive right to subscribe for capital contributions.
Scenario 1 (A listed company controls the target company): Target Company A is a limited liability company with an original registered capital of RMB 90 million, all of which has been fully paid up. Listed Company A holds a 60% equity interest in Company A and consolidates it into its consolidated financial statements; Shareholder B holds a 30% equity interest, and Shareholder C holds a 10% equity interest. Company A now proposes to increase its registered capital by RMB 10 million, and the listed company intends to waive its right to participate in this capital increase.
1. The newly introduced investor does not have any affiliated relationship with the listed company.
Criteria for judgment: ① The priority subscription rights that a listed company may exercise are proportional to its paid‑in capital ratio; accordingly, the waiver amount is 10 million × 60% = 6 million. ② In accordance with the criteria for exercising waiver rights set forth in the Stock Listing Rules of the Shanghai, Shenzhen, and Beijing stock exchanges—where applicable (note: the Beijing Stock Exchange does not have explicit requirements but may be referenced—the waiver amount shall be compared against the listed company’s most recent audited total assets, market capitalization, or net assets (with net assets applying on the Shenzhen and Shanghai main boards)). ③ If there has been no change in the scope of consolidation, the dilution ratio (i.e., the dilution rate corresponding to the full waiver, which is 6%) shall be applied to compare the target company’s financial data with the corresponding financial data of the listed company, in compliance with Articles 7.1.2/6.1.2 and 7.1.3/6.1.3 of the Shanghai, Shenzhen, and Beijing Stock Listing Rules.
Note: If the scope of consolidated financial statements changes, compare the target company’s overall financial metrics with those of the listed company. If a portion of the priority subscription rights is waived, apply the same analytical framework and make the corresponding adjustments to the waived portion.
2. The newly introduced investor has an affiliated relationship with the listed company, thereby constituting a joint investment with an associated party.
Criteria for judgment: ① Since this involves a waiver of rights, the calculation shall be performed in accordance with the method set forth in item 1 above; ② At this point, two categories of related-party transactions are involved: one is the related-party transaction arising from the waiver of rights, and the other is a joint investment with a related party. Pursuant to Article 21 and Paragraph 1 of Article 22 of the “Regulatory Guidelines on Transactions and Related-Party Transactions” issued by the Shenzhen Stock Exchange and the Beijing Stock Exchange, “a listed company’s related party unilaterally provides to the listed company…” Controlled When a company increases or reduces its capital, the relevant threshold for calculating the transaction shall be the amount of the increase or reduction effected by related parties. In the two aforementioned related-party transactions, the second category typically involves larger transaction amounts; therefore, the higher of the two—namely, the amount of the related party’s capital contribution—is used as the basis for determining the transaction value. For instance, if the entire RMB 10 million is subscribed by related parties, that RMB 10 million would then be compared against the thresholds for related-party transactions set forth in the Stock Listing Rules for both the board of directors and the shareholders’ meeting.
Note: The Shanghai Stock Exchange’s “Guidelines on Trading and Related-Party Transactions” do not explicitly stipulate the aforementioned provisions; however, it is recommended to apply them by analogy.
Scenario 2 (A listed company holds an equity stake in the target company) Company A, a limited liability company, has an original registered capital of RMB 90 million, all of which has been paid up. Listed company A holds a 30% equity interest in Company A, which is not included in the listed company’s consolidated financial statements, while shareholder B holds a 60% equity interest and shareholder C holds a 10% equity interest. Company A now plans to increase its registered capital by RMB 10 million, and the listed company intends to waive its right to participate in this capital increase.
1. The newly introduced investor does not have any affiliated relationship with the listed company.
The criteria for determination are the same as the first listing criterion in Scenario 1.
2. The newly introduced investor has an affiliated relationship with Listed Company A, thereby constituting a joint investment with an associated party.
Criteria for judgment: ① Since this involves a waiver of rights, the calculation shall be performed in accordance with Method 1 set forth in Scenario 1. ② According to Article 21 and Paragraph 2 of Article 22 of the Shenzhen Stock Exchange and Beijing Stock Exchange’s “Guidelines on Trading and Related-Party Transactions,” “If a related party of a listed company unilaterally increases its capital contribution to an equity‑participated enterprise of the listed company, or if such a related party unilaterally acquires equity interests or investment shares held by other shareholders of an entity in which the listed company holds an equity interest, this constitutes a joint related-party investment. Where such transactions involve a waiver of rights, the relevant provisions governing waivers of rights shall apply.” Accordingly, the amount of the related‑party transaction equals the amount waived by the listed company, which is calculated as RMB 10 million × 30% = RMB 3 million. This RMB 3 million is then compared against the threshold for related‑party transactions stipulated in the Rules for the Listing of Stocks.
Scenario 3 (A listed company controls the target company) Company A, a joint-stock company, has an original registered capital of RMB 90 million, all of which has been fully paid up. Listed company A holds a 60% equity interest in Company A and includes it within its consolidated financial statements, while shareholder B holds a 30% equity interest and shareholder C holds a 10% equity interest. Company A now proposes to increase its registered capital by RMB 10 million, with the listed company intending to waive its right to subscribe for the additional shares. The company’s articles of association or any relevant agreements do not provide for pre‑emptive subscription rights for the existing shareholders.
1. The newly introduced investor does not have any affiliated relationship with the listed company.
Criteria for judgment : Since a joint-stock company does not involve the waiver of rights, this capital increase and share expansion does not constitute a transaction as defined under the Rules for the Listing of Stocks. However, if such an event results in a change to the scope of consolidated financial statements—particularly where the deconsolidation would have a material impact on the listed company’s financial position or operating results, or would alter the listed company’s relationship with the entity concerned—the listed company shall disclose the matter promptly.
2. The newly introduced investor has an affiliated relationship with the listed company, thereby constituting a joint investment with an associated party.
Criteria for judgment : According to Article 21/Paragraph 2 of Article 22 of the “Regulatory Guidelines on Trading and Related-Party Transactions” issued by the Shenzhen Stock Exchange and the Beijing Stock Exchange, “A listed company’s related party, acting unilaterally, shall…” When a listed company’s controlled entity increases or decreases its capital, the relevant transaction amount shall be used as the basis for calculation. , the relevant provisions on related-party transactions set forth in the Stock Listing Rules shall apply. Where the matter involves a waiver of rights, the applicable rules on waivers shall also be applied. Since the subject matter is a joint-stock company and no waiver of rights is involved, the amount of the related-party transaction is equivalent to the amount of the related party’s capital increase; this amount is then compared with the thresholds for related-party transactions stipulated in the Stock Listing Rules of the Shanghai, Shenzhen, and Beijing stock exchanges.
Note: The Shanghai Stock Exchange’s “Guidelines on Trading and Related-Party Transactions” do not explicitly stipulate the aforementioned provisions; however, it is recommended to apply them by analogy.
Scenario 4 (A listed company holds an equity stake in the target company) : The target company, Company A, is a joint-stock company with an original registered capital of RMB 90 million, all of which has been fully paid up. Listed company A holds a 30% equity interest in Company A, which is not included in the listed company’s consolidated financial statements; shareholder B holds a 60% equity interest, and shareholder C holds a 10% equity interest. Company A now proposes to increase its registered capital by RMB 10 million, and the listed company intends to waive its right to participate in this capital increase. The company’s articles of association or any relevant agreement does not provide for pre‑emptive subscription rights for the existing shareholders.
1. The newly introduced investor does not have any affiliated relationship with Listed Company A.
Criteria for judgment : Since a joint-stock company does not involve the waiver of any rights, this capital increase and share expansion does not constitute a transaction as defined under the Rules for the Listing of Stocks. However, if failure to proceed with the capital increase would have a material impact on the listed company’s financial condition or operating results, the listed company shall disclose such information promptly.
2. The newly introduced investor has an affiliated relationship with Listed Company A, thereby constituting a joint investment with an associated party.
Criteria for judgment : In accordance with Articles 17, 21, and 22 of the “Regulatory Guidelines on Transactions and Related-Party Transactions” issued by the Shanghai, Shenzhen, and Beijing stock exchanges, “where a related party of a listed company unilaterally increases or decreases its capital contribution to an enterprise controlled by or held in equity by the listed company, such action constitutes a joint related-party investment. If it involves any waiver of rights, the relevant provisions governing waivers shall apply. If no waiver of rights is involved but the transaction may have a material impact on the listed company’s financial condition or operating results, or may alter the related‑party relationship between the listed company and the relevant entity, the listed company shall make timely disclosure.” Since the subject matter is a joint-stock company and no waiver of rights is involved, the ultimate conclusion is that this constitutes a joint related-party investment. Accordingly, the listed company must consider whether refraining from increasing its capital could materially affect its financial condition or operating results, or lead to a change in its related‑party relationship with the entity; in such cases, the listed company is required to disclose promptly.
III. Cases of Violations
1. In the absence of compliance with the deliberation procedures and failure to disclose the waiver of the right of first refusal, the company was subject to an administrative regulatory measure ordering it to make corrections by the Securities Regulatory Bureau, while the relevant persons held accountable were issued warning letters as an administrative regulatory measure and had such actions recorded in the integrity files of the securities and futures markets.
2. The waiver of the right of first refusal constitutes a related-party transaction, and the company and relevant personnel have been subject to administrative regulatory measures in the form of a warning letter issued by the Securities Regulatory Bureau, with such actions recorded in the integrity files of the securities and futures markets.
In summary, when a listed company undertakes an act of waiving its rights, it must first, in accordance with exchange rules, precisely delineate the applicable circumstances for such waiver. This requires considering multiple dimensions, including the type of underlying entity, the shareholding ratio, whether the counterparty to the capital increase or equity transfer is an affiliated party, and whether the transaction will result in a change to the scope of consolidated financial statements. The company must accurately calculate the transaction amount and relevant financial metrics associated with the waiver, and strictly differentiate between ordinary transactions and related-party transactions, applying tiered review and disclosure requirements at both the board of directors and shareholders’ meeting levels. In particular, where a joint-stock company has not stipulated a preemptive right, such a situation does not constitute a “waiver” under the relevant rules; however, the company must still assess the financial implications and any changes in related-party relationships, and disclose accordingly as required.
In practice, the compliance red lines for such matters are clear: failure to follow the deliberation procedures or delayed disclosure of related‑party waiver transactions may expose the company and the relevant responsible persons to regulatory warnings, orders to make corrections, and other penalties, with such incidents recorded in their integrity files. Listed companies’ board offices must establish standardized assessment procedures, rigorously apply the higher‑of‑the‑two‑methods principle, promptly determine the nature of each transaction, accurately calculate all applicable metrics, eliminate procedural and disclosure deficiencies, and ensure full compliance throughout the entire capital‑market activity.
(This article reflects the author’s personal views and is intended solely for informational purposes; it does not constitute legal advice or an interpretation of the law by Taihe Law Firm. This disclaimer is hereby made.)
This article is published by Jiangsu Taihe Law Firm. The author is Jiangsu Taihe Law Firm, and the copyright belongs to the author. Please cite the original source when reprinting; violations will be prosecuted.
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