Guangdong Midea Electric Appliances Co Ltd suspended its planned share incentive scheme because it contravened new rules issued by the stock regulator to prevent management from making improper gains arising from favorable timing.
Shenzhen-listed Midea suspended the share incentive scheme as the China Securities Regulatory Commission has forbidden companies from providing incentive programs while offering new stock at the same time, Midea said in a statement today.
Midea announced the share incentive scheme in January. It applied to add new shares publicly in February while the proposal was still pending stock regulator approval.
Earlier this month, the government issued a set of new rules on incentive plans at listed firms. The rules state that a listed company should not carry out major actions such as new stock issues, asset injections or bond offerings within 30 days of having announced an incentive plan that obtained shareholder approval.
Shanghai-listed Tebian Electric Apparatus Stock Co Ltd also suspended its incentive scheme for similar reasons on May 14.
According to Shanghai Securities News, another 13 listed companies will have to change or scrap stock incentive plans for the same reason.
(Shanghai Daily May 27, 2008)