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joined discussion12/28/2021 10:20

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.
The requirements apply to new share listings and won’t affect the foreign ownership of companies already listed overseas, according to the nation’s economic planning agency. The move comes days after 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. Any company whose listing could pose a national security threat would be banned from proceeding.

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