Under the Securities Law, tender offer rules will apply to, among other things, the scenario whereby an investor offering to purchase 25% or more shares from existing shareholders (25% Acquisition) in a public company. However, the Securities Law also allows a 25% Acquisition to be exempted from tender offer rules if it is approved by the Shareholders Meeting of the relevant public company.

In case the Shareholders Meeting approves an exemption of the tender offer rules for a 25% Acquisition, the Securities Law does not expressly prohibit the selling shareholders from voting at the Shareholders Meeting. The regulations on related party transactions under the Enterprise Law do not capture a 25% Acquisition because the public company is not a party to a 25% Acquisition. Therefore, technically, the selling shareholders will theoretically still be allowed to vote at such meeting.

However, the votes by the selling shareholders especially in case the selling shareholders are controlling the public company may still be challenged in practice due to the apparent conflict of interest. To obtain clarity on this issue, further clarification from the State Securities Commission may need to be obtained.