China is drafting rules over the transfers of previously non-tradable equities in state-owned listed enterprises after a shareholding revamp in domestic stock markets, state media reported yesterday.

Big shareholders at state-held public firms will be allowed to offload up to 50 percent of their stakes in the company within three years, the Shanghai Securities News said, citing unnamed sources.

Chinese stock regulators launched a program in May 2005 to require 1,400-odd mainland-traded firms to unlock state-owned ownership into free-floating entities to improve market quality and beef up management.

More than 95 percent of domestically listed companies wrapped up the stock conversions by the end of last year, granting large shareholders the right to dispose of their stakes pending lock-up periods.

Financial authorities are drafting three sets of rules to supervise the purchase and sales of state equities by large shareholders at listed firms, as well as equity transfers among state-owned enterprises, the China Securities Journal said.

The report, quoting Liu Jipeng, a professor at China University of Political Science and Law, said that the rules will stipulate vetting procedures, price-fixing methods and information disclosures for the transfers of state shares.