China Proposes Long Awaited New Regulations for Offshore Listings

The latest in a flurry of regulatory activities, China Securities Regulatory Commission (CSRC) proposed new rules to improve oversight of Chinese companies listed abroad. The draft, keenly awaited by investors, extend CSRC’s oversight of offshore listings with variable interest entity (VIE) structures.

Both investors and Chinese companies have been waiting anxiously for the new rules, wondering how tighter they would be.

CSRC said the new rules were not about “policy tightening” but they were aimed at replacing existing rules that are outdated. the regulator also underlined that new rules reflect China’s desire to further open up.

The existing rules allow CSRC to only examine companies incorporated in mainland China and propose an offshore listing.

China has implemented a series of regulatory rules this year including ones against anti-competitive behavior and reining in a debt binge by property developers that has shaken domestic and global markets.

Chinese companies that want to be listed offshore use the VIE system, particularly to avoid Chinese regulations restricting foreign investment in sensitive industries like media and telecommunications.

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