China’s forthcoming rules on overseas IPOs will apply to Chinese companies that want to list in Hong Kong,
the China Securities Regulatory Commission told CNBC on January 28. In an exclusive interview with
CNBC, the Commission’s Director General of the International Affairs Department, Shen Bing, spoke about
what draft rules will mean for Chinese companies that are planning to list in the U.S. and other markets following last summer’s crackdown. he said “By overseas, we mean, of course, you know, anywhere besides
mainland China. Of course, it includes Hong Kong.” Shen Bing said the rules would apply not only to
Chinese companies wanting to offer H-shares in Hong Kong, but also a category called “red chips,” which
previously did not need the CSRC’s approval. The draft rules state that overseas listings are prohibited in
some of the following situations: (i) when other government departments consider the offering a threat to
national security; (ii) if there are disputes over the ownership of the company’s major assets; or (iii) if there’s
criminal offense by a controlling shareholder or executive within the last three years.
(Comment: The Regulations are due to come into force shortly as the period for public comment ended on
January 24.)
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