China’s New VIE Rule Eases Concerns about Overseas IPOs

On December 24, China Securities Regulatory Commission researched and drafted the "Administrative Regulations of the State Council on Overseas Issuance of Securities and Listing by Domestic Enterprises (Draft for Public Comments)", and simultaneously drafted the "Administrative Measures on Overseas Issuance of Securities and Listing by Domestic Enterprises (Draft for Public Comments)", to consult the public on the institutional rules related to the overseas listing.

The two sets of documents complement each other and they have a landmark positive impact on supporting domestic enterprises to list overseas in compliance with the law.

According to the new regulations, a unified filing management will be implemented for direct and indirect overseas listing activities of domestic enterprises.

The implementation of the new regulations will start with the incremental amount, and the filing procedures will be carried out as required for the incremental enterprises and the stock enterprises with refinancing and other activities. At the same time, the currency restrictions on raising funds and paying dividends abroad have been relaxed to meet the needs of enterprises raising RMB abroad.

China Securities Regulatory Commission clarified that under the premise of complying with domestic laws and regulations, VIE structure companies that meet compliance requirements can go overseas for listing after filing.

In addition, on December 25th, at the 2021 Shanghai International Financial Center Development Forum, Zhou Xiaochuan, President of the China Institute of Finance and former Governor of the People's Bank of China, stated that it is necessary to study and promote the development of an international board in the Shanghai stock market.

He said that from the perspective of equity and bond markets, the construction of Shanghai's international financial center mainly focuses on two aspects. On the one hand, it is funds, which must guide the inflow and outflow of domestic funds and international funds; on the other hand, it is the main body of fund-raising. The construction of an international financial center requires the deep participation of domestic and international institutions in the Chinese market.