China will keep its offshore financing channels open and provide clear, transparent and actionable rules for companies to list abroad, the CSRC said.

(Image credit: Unsplash)

The Chinese securities regulator is finally beginning to clarify the regulatory regime for local companies listing abroad, which is expected to allow companies that once suspended their overseas listing plans to restart the process.

The China Securities Regulatory Commission (CSRC) today released for public comment draft regulations governing the issuance and listing of securities by local companies abroad.

According to the draft regulations, companies with VIE structure that meet the compliance requirements can go overseas for listing after filing, provided that they comply with local laws and regulations.

The filing system does not review whether a company meets the conditions for listing in an overseas listing, but rather focuses on strengthening domestic and foreign regulatory collaboration, the CSRC said.

For companies involved in foreign investment security review, cybersecurity review and other laws and regulations within the scope of the foreign listing, they should file a review before submitting a filing application.

The CSRC's deadline for comments is January 23, 2022.

The CSRC said in a separate question and answer session that opening up to the outside world is China's basic national policy and that the purpose of improving the regulatory regime is to promote healthier, more sustainable and longer-term development, rather than policy tightening.

The move is needed to support the development of local companies using overseas capital markets to raise funds in accordance with the law, the CSRC said, adding that the Chinese regulator's attitude of respecting companies' independent choice of listing venues in accordance with the law is consistent and clear, and has never wavered.

China will keep its offshore financing channels open, provide clear, transparent and operable rules for companies' activities in listing abroad, and build a more stable and predictable institutional environment, the CSRC said.

The CSRC said China will actively promote cross-border audit and regulatory cooperation. In today's highly globalized capital markets, there is a greater need for national regulators to strengthen regulatory cooperation and policy communication, it said.

The CSRC will further promote the improvement of cross-border securities regulatory cooperation arrangements with securities regulators in major overseas markets, which include:

Establishing a filing information notification mechanism with overseas securities regulators to enhance information sharing on overseas listing regulation.

Strengthening cross-border law enforcement cooperation to jointly combat corporate financial fraud and other illegal and unlawful acts, maintain market fairness and order, and protect the legitimate rights and interests of investors.

Actively promote cross-border audit and supervision cooperation to create a favorable regulatory environment for enterprises listed abroad.

In recent years, there have been serious violations such as financial fraud by individual listed companies abroad, which have damaged the overall international image of Chinese companies and adversely affected the financing of Chinese enterprises abroad, the CSRC said.

Improving the regulatory system for overseas listings and enhancing the overall compliance level of Chinese companies' overseas listings will help protect the legitimate rights and interests of domestic and foreign investors and promote the standardized, healthy and orderly development of enterprises' overseas listing activities, it said.

Chinese securities regulator says it recently had constructive communication with US SEC, PCAOB