Chinese regulator says government policies don’t necessarily relate to overseas IPOs

China Securities Regulatory Commission (CSRC) building in Beijing
People walk past a sign of the China Securities Regulatory Commission (CSRC) at its building on Financial Street in Beijing, China July 9, 2021. REUTERS / Tingshu Wang

December 5, 2021

China’s securities regulator on Sunday said Beijing’s recent policy moves were not aimed at specific industries or private companies, and did not necessarily involve firms seeking to listed in foreign markets.

China has implemented a sweeping regulatory crackdown in recent months for internet companies, for-profit educators, and real estate developers, among others.

“The main purpose of (those moves) is to regulate monopoly, protect the interests and data security of small and medium-sized companies, as well as secure personal information,” the Securities Regulatory Commission said. China (CSRC) said in a statement.

The cyber regulator has asked companies with more than one million users in China to conduct a security review before sending user-related data overseas or listing shares abroad.

On Friday, Chinese ride-hailing giant Didi Global said it plans to delist on the New York Stock Exchange, just five months after its launch, and pursue a listing in Hong Kong.

The Securities and Exchange Commission said it has taken note of new rules introduced by the US Securities and Exchange Commission (SEC) that require Chinese companies to detail their ownership structures and audits. .

Several media reports saying that China is likely to ban companies with a VIE (Variable Interest Entity) structure from listing in the US is a case of “totally misunderstood and (is) ) misread,” the CSRC said.

The VIE structure, widely used by technology companies, was created two decades ago to circumvent rules restricting foreign investment in sensitive industries such as media and telecommunications.

CSRC policies are not intended to suppress specific companies or private companies and “have no necessary connection with the overseas listings of companies,” the commission said.

The commission said it was aware of a number of Chinese companies that are actively communicating with domestic and foreign regulators to list shares in the United States. CSRC will respect companies’ choice of listing location on a compliance basis.

The Securities and Exchange Commission said it has held frank, constructive communication with the SEC and the Public Company Accounting Oversight Board, and has made positive progress in fostering cooperation on a number of issues. main topic.

However, it should be noted that some forces in the US have “politicized” capital market supervision and threatened Chinese companies to delist in the country in recent years, which goes against the odds. against the principles of a market economy and hurt global investors, according to the statement.

CSRC said it will continue to talk with its US partner to resolve outstanding issues in the areas of auditing and regulation as soon as possible.

(Reported by Min Zhang, Samuel Shen and Norihiko Shirouzu. Editing by Gerry Doyle and David Evans) Chinese regulator says government policies don’t necessarily relate to overseas IPOs

Bobby Allyn

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