CSRC announces new rules for overseas IPOs

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CSRC announces new rules for overseas IPOs

The China Securities Regulatory Commission (CSRC) recently announced new rules that require domestic firms to comply with national security regulations and the personal data protection law measures before going public overseas.

China-based firms now will have more clarity regarding whether they can list overseas in the USA.

The CSRC’s rules do not ban the Variable Interest Entity (VIE) structure which is commonly used by Chinese companies while listing in the USA.

The CSRC said its new rules for overseas listings will be effective from March 31. The rules are same as that of a draft in late 2021, with no implementation date.

The new rules call for IPO underwriters to annually report to the CSRC about their involvement with Chinese listings overseas.

The CSRC also said companies or individuals may be fined up to $1.5 million for sharing misleading information or for violating the rules.

These new rules are being announced for the purpose of protecting personal data and national security.

After an 18-month pause in overseas listings, more China-based firms are returning to the USA IPO market in the current year.