The Shanghai Stock Exchange on Thursday tightened the rules governing the disclosure of large shareholders' decisions to increase their stakes. The move aims to prevent price manipulation and protect minority shareholders.

The new rules, which came in response to an amendment on takeover regulations by the China Securities Regulatory Commission earlier this year, requires a shareholder to make a public information disclosure if it has a 30 to 50 percent stake in a public company and plans to buy additional shares amounting to less than 2 percent within the next 12 months.

The exchange's existing takeover rules stipulate that a shareholder must make a public tender offer if it holds more than 30 percent of a public company and wants to buy more than 2 percent over the next 12 months.

The new rules also require shareholders with more than 50 percent stakes to make disclosures if they want to add to their stakes.

"The rules are clearly aimed at eradicating price manipulation. Majority shareholders can't (scheme) if everything they do is made public," said Wang Jianhui, chief economist with Southwest Securities Co Ltd.

Disclosures include share purchase plans, target prices and commitments to hold newly purchased shares for a fixed period.

After a disclosure is made, a shareholder can only sell shares six months after having made the latest purchase, according to the new rules.

Majority shareholders are banned from buying shares when a company is to release its results, is to make periodic announcements within 10 days, or is in the process of making important decisions.

Zhang Qi, an economist with Haitong Securities Co Ltd, said that many of the disclosures required have already been adopted by public companies, but having formal rules will push public companies to do better.

gaochangxin@chinadaily.com.cn