Saturday, December 20, 2008

Yuan Watch : Fine print with Chinese Characteristics

By Luo Jun and Cathy Chan

Dec. 19 (Bloomberg) -- Bank of America Corp.’s plan to sell about $2.8 billion of shares in China Construction Bank Corp. was undone by a Chinese securities law provision that would have forced it to forfeit profits from the sale, two people familiar with the matter said.

Bank of America, which raised its stake in China Construction in June and November, on Dec. 15 halted the sale of as many as 5.5 billion shares in the Chinese bank after discussions with lawyers, one of the people said, declining to be identified because the talks are private.

China’s securities law bans investors holding more than 5 percent of a locally incorporated, publicly traded company from selling shares within six months of buying the stock. Shareholders who fail to observe the rule may be forced to hand over any profits from a sale to the company whose stock they sold.

No comments: