The CSRC Solicits Public Opinions on Rules Regarding Overseas Listings
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In order to promote lawful use of overseas capital markets by domestic companies to achieve sound development, and regulate overseas securities offering and listing activities by domestic companies in direct or indirect form, the CSRC, jointly with relevant departments under the State Council, proposes to revise the Special Provisions of the State Council Concerning the Overseas Securities Offering and Listing by Limited Stock Companies (No. 160 Order of the State Council), and formulates the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments, hereinafter referred to as the “Administration Provisions”), as well as Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments, hereinafter referred to as the “Measures”) as supporting rules. Now the two newly drafted regulations are open for public consultation.
The Administration Provisions carries five chapters with 28 articles, with main contents as follows:
First, improving the regulatory system. Under the Administration Provisions, a filing-based regulatory system will be introduced to cover both direct and indirect overseas offering and listing. Second, enhancing regulatory coordination. The Administration Provisions requires that an inter-departmental regulatory cooperation mechanism be established in order to effectively coordinate with other mechanisms such as security reviews, and that regulatory authorities should step up cross-border cooperation with overseas counterparts by sharing filing information as well as strengthening enforcement cooperation. Third, defining legal liabilities. The Administration Provisions defines the legal liabilities of breaches such as failure in fulfilling filing obligations or fraudulent filing conducts, with an aim to increase the cost of violations. Fourth, promoting the inclusiveness of the system. Out of the need for supporting the opening-up of capital markets and the growth of companies, the Administration Provisions specifies that under circumstances where employee stock ownership plans (ESOPs) are to be deployed, direct overseas offering and listing by domestic companies may take the form of private placement to eligible domestic investors, and that full circulation of domestic unlisted shares should also be facilitated. Besides, currency restrictions on fund-raising and dividends payment are relaxed, so as to meet the need of companies to raise funds in RMB in overseas markets.
The Measures has 24 articles which mainly include:
First, the scope of activities subject to the filing requirement, and relevant criteria for determining whether an activity falls within the scope. Second, the entities with filing obligations and procedures for making filings. Third, requirements on companies to report material events, so as to enhance interim and ex-post supervision on a continuous basis. Fourth, requirements on filings of overseas securities firms who provide services for overseas securities offering and listing by domestic companies.
China stays committed to further opening-up of capital markets, as well as supporting domestic companies in seeking overseas listing and utilizing market resources both at home and abroad in compliance with relevant laws and regulations. The new rules aim to promote better compliance and development. We welcome valuable public comments for our further improvement of these two drafts. The rules will be implemented timely after the completion of consultation and due legislative procedures.