China announces new rules for overseas IPOs, details here

The China Securities Regulatory Commission (CSRC) has set out new rules regarding how domestic companies can list overseas in the United States. As per the new rules, which will come into effect from 31 March, the CSRC rules would support the overseas listing of companies with variable interest entity (VIE) structures, which creates a listing through shell companies, if they abide by domestic laws regarding data protection and national security. The new rules also call for Initial Public Offering underwriters, normally international investment banks, to annually report their involvement with Chinese listings overseas to the CSRC. The rules which are similar to a draft published in late 2021, signal a softening of the Chinese government’s stance on overseas listings, as per Bloomberg. “As long as companies stay compliant with the regulations, their listings won’t be affected no matter which market they choose,” the CRSC said in a different Q&A on its website, as quoted by Bloomberg. “The CSRC and related authorities will respect companies’ independent choice and provide support.” The companies who opt for an overseas listing will have to register with the regulator after a transition period. The CSRC has the power to block listings that may impede national security or involve shareholders or companies that have committed corruption, taken bribes or are under investigation by authorities. Organisations or individuals who breach the law may be fined up to 10 million yuan ($1.5 million), as per a CNBC report. The new rules could help chart out a path for Chinese investors and companies to tap global public markets once more, amid rising interest in the country’s assets. Chinese firms are returning to the US IPO market this year after an 18-month lull in overseas listing. Last year, American inspectors said that they were able to review the audit work of China-based companies, reducing the risk of them being taken off the exchanges. Chinese companies have struggled to list abroad amid increasing security from the US Securities and Exchange Commission as well as at home. After ride-sharing company Didi’s US IPO in June 2021, China’s cyber security regulator announced that internet platform operators who have the personal data of more than one million users must apply for a cyber security review before listing overseas. Did later delisted “voluntarily” from the New York Stock Exchange after the measure was approved by its shareholders. Read all the Latest News, Trending News,  Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.