Taihe · Listed Company Securities Compliance Column | The Full Process of Convertible Bond Conversion Price Adjustment and Practical Operational Warnings
Release Date:
2026-09-22
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 logic 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 pragmatic language and scenario‑based analysis to clarify compliance requirements, map out risk pathways, and offer actionable guidance, thereby 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.
After a listed company successfully issues convertible corporate bonds to an indefinite group of investors, it must pay close attention to the disclosure requirements related to these bonds. Among these, the conversion price is a key issue, as it often serves as a critical factor that directly affects investors’ interests. This article examines the key considerations surrounding adjustments to the conversion price.
I. Circumstances for Adjusting the Conversion Price
1. Passive Adjustment: Following the issuance of a convertible bond, if the listed company’s share capital changes due to dividend distributions, rights issues, additional share offerings, stock dividends, spin-offs, capital reductions, or other reasons, the company shall, in accordance with the principles and methods set forth in the offering prospectus or the restructuring report, simultaneously adjust the conversion price and promptly fulfill its information disclosure obligations.
2. Proactive Adjustment: On the date when the conditions for revising the conversion price are triggered, the listed company shall convene a board of directors meeting to deliberate and decide whether to revise the conversion price. Prior to the opening of trading on the next business day, it must disclose a preliminary announcement indicating whether the conversion price of the convertible bond will be revised or left unchanged, and, in accordance with the provisions set forth in the offering prospectus or the restructuring report, promptly fulfill any subsequent deliberation procedures and information disclosure obligations.
II. How to Adjust the Conversion Price
Since the circumstances triggering a conversion price adjustment vary, the methods for calculating the adjusted conversion price also differ.
(1) First, there are cases of passive adjustment, which must be calculated strictly in accordance with the prescribed formula. These generally fall into the following five scenarios:
1. Distribution of stock dividends or capitalization of reserves: P1 = P0 / (1 + n);
2. Issuance of new shares or rights issue: P1 = (P0 + A × k) / (1 + k);
3. The two aforementioned items are calculated simultaneously: P1 = (P0 + A × k) / (1 + n + k);
4. Cash dividend distribution: P1 = P0 - D;
5. The above three items are carried out simultaneously: P1 = (P0 - D + A × k) / (1 + n + k)
Where: P0 is the conversion price before adjustment, n is the ratio of stock dividends or capitalization of reserves, k is the ratio of new share issuance or rights issue, A is the price of newly issued shares or the rights issue price, D is the cash dividend per share, and P1 is the adjusted conversion price.
(2) If the company’s common stock price remains persistently low, triggering the conditions for revising the conversion price, the board of directors may choose to revise or not revise the price. Should it opt for a revision, the company may set the revised price independently; however, the adjusted conversion price must comply with the provisions in the Offering Prospectus, which stipulate that “the revised conversion price shall not be lower than the average trading price of the company’s shares over the twenty trading days preceding the date of the shareholders’ meeting, nor lower than the average trading price of the immediately preceding trading day. At the same time, it shall not be lower than the most recent audited net asset value per share or the par value of the stock.” It should be noted that, for convertible bonds issued by listed companies to an indefinite group of investors, the conversion price may not be revised upward.
III. Procedure for Adjusting the Conversion Price
Exchange |
Passive adjustment scenario |
Situations of proactive adjustment upon triggering amendment provisions (Downward adjustment) |
Shenzhen Stock Exchange |
1. Upon the commencement of the conversion period, if suspension of conversion is required pursuant to the provisions of the offering prospectus, the company shall promptly consult with its relevant management departments and, no later than three trading days prior to the date of such suspension, disclose a “Notice of Suspension of Convertible Bond Conversion.” Note: If the company implements an equity distribution plan, and if there are shares held in the company’s share‑repurchase account, or if the company intends to adopt an equity distribution method that maintains the total amount of profit distribution, convertible bonds will be suspended from conversion during the period of such equity distribution. 2. Announcements regarding events that trigger an adjustment to the conversion price shall be filed and disclosed concurrently with the convertible bond announcement adjusting the conversion price. 3. The new conversion price has taken effect. |
1. A preliminary announcement shall be promptly disclosed five trading days prior to the anticipated triggering of the share‑conversion price adjustment conditions. 2. On the date when the conditions for revising the conversion price are triggered, the board of directors shall convene to deliberate and decide whether to revise the conversion price. If the board approves the revision, a notice of the revised conversion price shall be disclosed immediately. 3. A shareholders’ meeting shall be convened to deliberate and decide whether to approve the amendment to the conversion price (requiring a special resolution, with bondholders recusing themselves from voting); 4. Following approval by the shareholders’ meeting, a board of directors meeting was convened on the same day to deliberate and determine the final revised price, after which a “Notice of Share Conversion Price Revision” was issued. 5. On the next trading day, the conversion price adjustment will take effect. |
Shanghai Market |
Due to equity distribution: 1. T‑5 day: The company submits the “Notice on Adjustment of Conversion Price Due to Equity Distribution” and the “Application for Continuous Suspension and Resumption of Trading” (continuous suspension for conversion) (involving suspension procedures upon entering the conversion period); 2. T‑1 Day: The company submits the “Announcement on Implementation of Equity Distribution,” the “Announcement on Adjustment of Conversion Price (Equity Distribution),” as well as the “Application for Adjustment of Convertible Bond Conversion Price” and the “Application for Continuous Suspension and Resumption of Trading.” Conversion of the convertible bonds will be suspended. 3. T-day: The date on which the equity distribution announcement and the convertible bond conversion price adjustment announcement are disclosed; 4. T+n day: Ex‑dividend and ex‑rights date. On this day, the stock undergoes a rights and dividend adjustment, and for convertible bonds, share conversion resumes, with the corresponding adjustment to the conversion price taking effect. |
The first three steps are the same as those for the Shenzhen Stock Exchange; 4. T‑1 Day: Following approval at the shareholders’ meeting, a board meeting will be convened on the same day to deliberate and determine the final revised conversion price, after which the “Announcement on Revision of Conversion Price,” the “Application for Adjustment of Convertible Bond Conversion Price,” and the “Application for Suspension and Resumption of Trading (Conversion‑Related Trading Halt)” will be submitted. 5. T-Day: The “Announcement on Revision of the Conversion Price” is disclosed, and conversion of the convertible bonds is suspended. 6. On T+1 day, the conversion price adjustment takes effect, and the convertible bond resumes trading for conversion. |
Except for matters arising from the distribution of equity interests: 1. T‑1 Day: The company submits the “Announcement on Adjustment of Conversion Price,” along with the “Application for Adjustment of Convertible Bond Conversion Price” and the “Application for Suspension and Resumption of Trading” (conversion‑related suspension) (for securities entering the conversion period, suspension procedures are required). 2. T-Day: The “Announcement on Adjustment of Conversion Price” is disclosed, and conversion of the convertible bond is suspended. 3. T+1 day: The adjustment to the conversion price takes effect, and the convertible bond resumes conversion. |
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Beijing Stock Exchange |
Due to equity distribution: 1. T‑1 Day: The company shall submit the “Announcement on Implementation of Equity Distribution” and the “Announcement on Adjustment of Conversion Price,” and, no later than that trading day, file the “Application Form for Suspension of Convertible Bond Conversion” and the “Announcement on Suspension of Convertible Bond Conversion.” At the same time, it shall submit the application for ex‑dividend and ex‑rights treatment and the “Application Form for Adjustment of Convertible Bond Conversion Price.” 2. T-day: The convertible bond trading is suspended for share conversion; the date on which the “Announcement on Implementation of Equity Distribution” is disclosed. 3. T+n day: Ex-dividend and ex‑rights date; convertible bonds resume conversion. |
Same as the Shenzhen Stock Exchange; |
Due to the issuance of shares: 1. T‑2 Day: The company submits the “Application Form for Adjustment of Convertible Bond Conversion Price and Suspension of Conversion” and the “Announcement on Adjustment of Convertible Bond Conversion Price and Suspension of Conversion.” 2. T-Day: Share conversion suspended; 3. T+1 day: The adjustment to the conversion price takes effect, and share conversion resumes. |
IV. Case Warning
In July 2023, Company A publicly issued convertible bonds with an initial conversion price of RMB 33.12 per share. In September 2023, the company applied to vest its second‑class restricted shares, resulting in an increase in total share capital; however, it failed to adjust the conversion price in a timely manner. The convertible bonds entered the conversion period in January 2024. Prior to the commencement of the conversion period, the company submitted a “Notice on the Commencement of Conversion of Convertible Bonds” along with a “Convertible Bond Conversion Application Form,” intending to proceed at the initial conversion price of RMB 33.12 per share. Following review, the submission was returned due to identified errors.
Key points: The grant and vesting of restricted shares, as well as the exercise of stock options, also constitute equity‑related changes that trigger a passive adjustment to the conversion price. Many companies focus solely on dividend distributions and may overlook equity‑incentive‑related adjustments. Prior to filing a notice announcing the commencement of the conversion period for convertible bonds, listed companies should carefully verify whether the conversion price has already been adjusted and disclose in the announcement the current conversion price along with all prior adjustments and revisions, ensuring that the conversion price stated in the company’s public disclosure reflects the most recent revised figure.
(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 statement 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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