State shareholders of listed companies can dispose of no more than 5 percent of their total holdings in any period of three consecutive accounting years, the China State Asset Supervision and Administration Commission and the China Securities Regulatory Commission said in a statement Friday.

Disposals of any stakes more than 5 percent will need to be approved by regulators.

Related readings:  Individual shareholders to enjoy record bonus  Listed companies must disclose securities investments  SOE restructuring picks up momentum Special Coverage: Markets Watch

There has been concern in the market that State shareholders could unload their share holdings.

Though the stock market more than doubled in 2006 and has added more than 30 percent year to date, it has fallen in recent weeks because of liquidity concerns and fears of possible further government tightening measures.

Regulators began allowing the conversion of State shareholders¡¯ nontradable shares into tradable stock in April 2005. At that time nontradable shares accounted for about two-thirds of the domestic stock market's capitalization.

The program is now well underway, with 97 percent of listed companies already having completed or in the process of completing the reform.

(For more biz stories, please visit Industry Updates)