The overhaul represents a major by Beijing to tighten scrutiny on overseas listings, after ride-hailing giant Didi proceeded with its New York IPO despite regulatory concerns over the security of its data.
| China has unveiled sweeping regulations governing overseas share sales by the country’s firms, taking one of its biggest steps to tighten scrutiny on international debuts in the wake of Didi Global’sThe regulations, issued by the country’s securities watchdog, commerce ministry and top economic planning agency over the past week, cast more uncertainty over the prospects for overseas initial public offerings that had proceeded virtually unchecked for two decades.
Overseas investors in such companies would be forbidden from participating in management and their total ownership would be capped at 30 per cent, with a single investor holding no more than 10 per cent, according to the updated list effective on January 1.Meanwhile, the China Securities Regulatory Commission proposed on Friday that all Chinese companies seeking IPOs and additional share sales abroad would have to register with the securities regulator.
In addition to the new rules on VIEs, regulators had previously proposed that firms with at least a million users undergo a cybersecurity review before going public overseas. Companies using the VIE structure would be allowed to pursue overseas IPOs after meeting compliance requirements, the securities regulator said, without providing further details. Foreign securities firms that underwrite Chinese firms’ overseas share sales are required to register with the CSRC and submit an annual report on the businesses.
Days after Didi’s mega $US4.4 billion IPO, China shocked investors in July by announcing it was investigating the company and ordered its services be taken off Chinese app stores, tanking the ride hailing firm’s shares. Didi said earlier this month that it would remove its American depositary shares from the New York Stock Exchange and pursue a listing in Hong Kong.reported that the firm has barred current and former employees from selling their shares indefinitely.
The Securities and Exchange Commission this month announced its final plan for putting in place a new law that mandates foreign companies open their books to US scrutiny or risk being kicked off the New York Stock Exchange and Nasdaq within three years.
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