China imposes curbs on Foreign IPOs

China will impose new restrictions on offshore listings by firms in sectors that are off-limits to foreign investment, a move that could plug a loophole long used by the country’s technology industry to raise capital overseas. Chinese firms in industries banned from foreign investment will need to seek a waiver from a negative list before proceeding for share sales, the National Development and Reform Commission and the Ministry of Commerce said in a statement on Monday. Overseas investors in such companies would be forbidden from participating in management and their total ownership would be capped at 30%, with a single investor holding no more than 10%, according to the updated list effective Jan

The overhaul represents one of the biggest steps taken by Beijing to tighten scrutiny on overseas listings, after ride-hailing giant Didi Global Inc. proceeded with its New York initial public offering despite regulatory concerns over the security of its data. While regulators stopped short of a ban on IPOs by companies using the so-called Variable Interest Entities (VIE) structure, the new rules would make the process more difficult and costly.