Draft rules to help regulate firms' overseas listings
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China released a set of draft rules on Friday that require local companies seeking overseas listings to register with the domestic securities regulator, in a key step to help local firms enter global capital markets in a well-regulated manner.
Chinese companies using the special ownership structure of a variable interest entity will continue to be allowed to get listed overseas as long as they comply with domestic laws and regulations and complete the registration, the China Securities Regulatory Commission said after releasing the new rules.
The new registration mechanism aims to encourage more overseas listings to take place in a sustainable and healthy manner, and should not be seen as "regulatory tightening" or an implicit approval system, according to the commission.
"The nation will not change the direction of expanding capital market opening-up, nor will it alter the stance of supporting enterprises to get listed overseas and make use of resources at home and abroad in accordance with laws and regulations," the commission said in a statement on Friday.
"The objective of regulation lies in promoting development," the statement said.
According to the draft rules, domestic companies seeking overseas listings directly and indirectly will both be required to submit materials to the commission regarding key compliance issues for registration. As for listings requiring security inspections, the issuers should apply for inspections prior to registration.
The draft rules came as the market has been awaiting China's specific regulations for overseas listings since the authorities said in July that there would be an update to related regulations rolled out back in 1994, which were deemed to have since lagged behind current market practices.
Apart from facilitating the well-regulated development of overseas floats by Chinese firms, the new rules will also help enhance the compliance level of the companies and safeguard the legitimate rights of foreign and domestic investors, the commission said.
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