Market
China: 定向增发 priced at the 定价基准日, and the 可转债 向下修正条款 that belongs to the issuer
A conversion price that refixes downward against future market prices at each conversion is not available to a Shanghai, Shenzhen or Beijing listed company. A-share private placement pricing is a formula struck at a pricing benchmark date, and the downward revision clause in a public convertible bond is an issuer-side covenant requiring a shareholder resolution, not an investor's floating strike.
Key takeaways
- 定向增发 is priced by formula, at a date. The issue price may not fall below 80% of the 20-trading-day average before the 定价基准日, the pricing benchmark date, and no issue may take more than 35 placees.
- 向下修正条款 exists, and points at the issuer. A public 可转债 may carry a downward revision clause, but the issuer invokes it, shareholders must approve it, and the revised price is itself floored.
- No facility, no at-the-market programme. Refinancing is a discrete, filed, exchange-reviewed event, not a line an issuer draws on.
- A consultation is live, and is not law. The CSRC published draft refinancing revisions on 3 July 2026, for comment closing 2 August 2026. Position as at 12 August 2026.
定向增发: the price is struck at the benchmark date
The A-share private placement — 定向增发, also written 非公开发行 — is priced by rule. Under the CSRC's Administrative Measures for the Registration of Securities Issuance by Listed Companies the price of an issue to specified persons may not be lower than 80% of the average trading price over the 20 trading days preceding the 定价基准日, the pricing benchmark date, and no more than 35 placees may be taken in any one issue.
Where that benchmark date falls is the part worth reading twice. The default is the first day of the issue period, with price and placees settled by a bidding process. The board resolution date may be used instead, but only where every placee is fixed in advance and is the controlling shareholder, the actual controller, a related party, an investor taking control through the issue, or an incoming strategic investor.
Either route ends the same way: the window looks backwards and closes. Nothing reads a price occurring after the benchmark date, which is the only kind a refixing conversion cares about.
The clause that looks like a refix, and is not
China does have a mechanism for moving a conversion price down after issue, which is why this market is so often misread. A publicly offered 可转债 commonly carries a 向下修正条款, a downward revision clause: where the shares have traded well below the conversion price, the issuer may propose resetting it so the bonds convert into equity rather than coming back as cash at the put date.
Read the ownership of that right and the resemblance collapses. The issuer decides whether to propose the revision; a shareholders' resolution is required to make it; and the revised price is itself floored. A floating strike inverts all three: the investor computes the price, no vote intervenes, and the only floor is negotiated. It protects the issuer's balance sheet, not the investor's economics. See dilution and conversion mechanics.
What is unavailable, and what an A-share issuer uses instead
| What an outside investor asks for | Position in the A-share market | The route that does exist |
|---|---|---|
| Conversion priced at each conversion | Unavailable. Pricing closes at the 定价基准日 or on the bid | A 定向增发 priced at the benchmark date |
| A strike the investor can move down | Unavailable. The 向下修正条款 is the issuer's, and needs a shareholder vote | A 可转债 with a revision clause the issuer may invoke |
| Drawdown on the issuer's demand | Unavailable. Each refinancing is filed and reviewed as its own event | A single placement sized to the requirement |
| Structural comparison only. Not an offer, a quote, or a rate card. | ||
The outside investor's second problem
Even if the pricing worked, a non-resident cannot simply subscribe. Access runs through the qualified foreign institutional investor channels or the strategic-investment regime for foreign investors. Placed shares are then locked for six months from the close of the issue, and for 18 months for exactly those pre-agreed insiders and strategic investors allowed the earlier benchmark date. The 减持规定, the shareholding-reduction rules, then throttle how fast a substantial holder may sell. And the proceeds still have to leave, which is a matter for SAFE rather than the exchange.
Four gates in series — formula, vote, lock-up, currency. Any one would be a constraint; together they are a different market.
General information, not legal advice. The figures here come from the consolidated Administrative Measures as amended in 2025, and the CSRC has draft revisions out for comment, so they may move. Take advice from qualified PRC counsel and read the current text before relying on any of them.
The July 2026 consultation, date-stamped
On 3 July 2026 the CSRC published draft revisions to the refinancing rules for comment: register once and place more than once, higher caps on smaller financings, more market-oriented pricing, tighter oversight of convertible bonds. None is in force, and "more market-oriented pricing" is not an investor-side floating strike.
Where a mainland group finds the structure
Groups that need a market-referenced instrument reach it through a listing outside the A-share market. Hong Kong permits a convertible under a general mandate, subject to a benchmarked initial price and a mandate a floating strike consumes at its floor — restrictive, but workable where the A-share rules are not. For the same closed answer reached differently, see India's statutory preferential-issue floor and Taiwan's three-year resale freeze. For the instruments see convertible notes and equity facilities; Rule 144 governs US registered securities, and the eligibility test is the first filter.
Primary sources
- CSRC — Administrative Measures for the Registration of Securities Issuance by Listed Companies
- Consolidated text of the Administrative Measures as amended in 2025
- Shanghai Stock Exchange, including the STAR Market
- Shenzhen Stock Exchange, including ChiNext
- State Administration of Foreign Exchange
Orientation
Commentary, press and unofficial texts: useful for orientation, never the citation of record.
Financing a Chinese issuer: frequently asked questions
Can an A-share company issue a convertible that refixes to future market prices?
No. A targeted placement of A-shares may not be priced below 80 percent of the average trading price over the 20 trading days preceding the pricing benchmark date, and the resulting price does not follow the market afterwards. A public convertible bond can carry a downward revision clause, but that clause is a covenant the issuer may invoke with shareholder approval, not a strike the investor recalculates at each conversion.
What is the downward revision clause and why does it not help an investor?
It lets an issuer whose shares have fallen well below the conversion price propose resetting that price downward, so the bonds convert instead of being put back for cash. The decision belongs to the issuer, it needs a shareholders' resolution, and the revised price is itself floored. Each of those is the mirror image of a floating strike, where the investor controls the price and no vote intervenes.
Can a foreign investor subscribe for an A-share placement?
Not simply. Participation runs through the qualified foreign institutional investor channels or the regime governing strategic investment by foreign investors in listed companies, each with its own conditions. Placed shares then carry a lock-up, later disposals are paced by the exchanges' shareholding-reduction rules, and moving the proceeds out is a foreign-exchange matter rather than a market one.
Does the CSRC consultation announced in July 2026 change the answer?
Not as at 12 August 2026. On 3 July 2026 the China Securities Regulatory Commission published draft revisions to the refinancing rules for public comment. They would let eligible companies register once and then place shares more than once, raise the caps on smaller financings, make private placement pricing more market-oriented, and tighten oversight of convertible bond issuance. That is a proposal; its final form and timing are unknown.
What is available instead
An A-share issuer's routes are the 定向增发 priced by formula at a benchmark date, and the public 可转债 whose downward revision clause belongs to the issuer. Where a group also lists in Hong Kong, that rulebook benchmarks the initial conversion price and caps the discount, and is usually the listing that can carry a structure.