Tuesday, January 04, 2022
Rules for going public tightened
China makes it difficult for Alibaba and Co. abroad
Before Chinese tech companies are allowed to go public abroad in the future, a security review will be due for online platforms from mid-February. The country is thus strengthening its state control – the rules may even apply retrospectively.
China continues to tighten the reins on the rules for IPOs of domestic technology companies abroad. From February 15, operators of online platforms with data from more than one million users must undergo a security check before they are allowed to issue shares in a stock market abroad, as the Internet regulator CAC announced.
In addition, from March 1st, the requirements for the use of algorithm technologies for collecting and evaluating data for personalizing content will be tightened and users will be granted more rights. The authorities are implementing proposals from last year that affect the Tiktok group Bytedance and the online retail giant Alibaba as well as a large number of other companies and further strengthen state control over China’s large tech industry.
The CAC announced the requirements for cybersecurity reviews in July. At that time, the authority had stated that the focus should be on whether the data could be influenced, controlled or manipulated by foreign governments after an IPO abroad. Last year, China tightened the rules for stock exchange listings abroad with a series of regulatory measures and dampened the desire of companies to do so. However, bankers and investor representatives hope that the new rules will create more clarity and security for IPOs in 2022.
In view of the problems with the Didi car service after the IPO in New York and the announced delisting under pressure from the Chinese authorities, investors feared that the government in Beijing would put a stop to all stock exchange listings abroad. However, it was initially unclear whether the new rules should also apply retrospectively.