China issues latest offshore listing rules

The China Securities Regulatory Commission, the country's top stock market watchdog, released on Friday new regulations for Chinese companies' overseas listings and securities issuances.

Made up of 35 detailed measures, the regulations aim to optimize the supervisory system, further clarify requirements to record overseas listings with Chinese regulators, strengthen cross-border securities supervisory cooperation, clarify legal responsibilities — especially those covering violations — and better meet companies' financing needs by relaxing certain limits for eligible companies.

Furthermore, a negative list mechanism has been introduced to clarify which cases are not eligible for overseas listings.

Standards for indirect overseas listings have been specified under the new regulations. For indirect listings in offshore markets, foreign firms will take controlling stakes in domestically registered Chinese counterparts with the former going public on bourses overseas. Direct offshore listings usually refer to initial public offerings.

For companies with a variable interest entity structure, in which a Chinese business sets up an offshore holding company with its domestic business controlled via various contracts, the qualified candidates will be supported to go public overseas by publishing domestic regulations in advance, according to the regulations.

The new regulations will take effect on March 31 together with another five sets of guidelines.

The CSRC said that the new regulations have been introduced to address the changing international environment and mounting market uncertainties.