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(BFM Bourse) – Chinese companies wishing to raise capital abroad will now have to register with the regulator, which will ensure that they comply with the rules established by Beijing, in particular concerning data security. A new way to encourage them to favor a listing on a Chinese market.
Is the love affair between Chinese companies and Wall Street coming to an end? In a context of renewed tensions between Beijing and Washington, and faced with the desire displayed by Xi Jinping to repatriate start-ups with high growth potential in local financial centers, the Middle Empire had already created the Beijing Stock Exchange mid-November last.
This is an additional step which has now been taken. Expected for many months after the Wall Street Journal reported in late August that Beijing was considering adopting new rules that would prohibit groups whose data collection is deemed sensitive from being listed outside of China, this reform plan was unveiled by the communist regime on Friday evening.
This stipulates that local companies, especially those with a technological vocation, will have to register with the National Securities Regulatory Authority if they wish to raise funds outside of China. The stock market policeman will then review these projects to ensure that companies are complying with data security laws.
Didi forced to leave Wall Street
At the end of last November, the Chinese authorities had already asked Didi, Uber’s rival, to withdraw from Wall Street, a few months after its introduction, fearing that the sensitive data accumulated by the VTC giant would leak abroad.
Many Chinese companies still currently use the Variable Rights Entity Structure (VIE) to list overseas, thereby bypassing Beijing’s restrictions on international investments that affect industries such as media. and education. The National Development and Reform Commission (CNDR) also banned on Monday that foreign capital participate in the management of these companies and capped the participation of foreign entities.
Quentin Soubranne – © 2021 BFM Bourse
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