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China: Zero tolerance policy on future overseas listings

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Authorities in China have announced strict screening regulations for local companies seeking to list on foreign stock exchanges. The announcement is explained as a regulatory measure against illegal practices related to overseas securities.

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China authorities announced that they will strengthen screening of overseas listings of domestic companies.

Chinese companies will have to undergo strict scrutiny from the authorities in order to list on overseas stock markets. On the 7th, Chinese Media outlet Caixin reported that the Chinese Communist Party Central Committee and State Council announced future guidelines with the “Opinion on Strictly Hitting Securities Illegal Activities”.

The Chinese government said in the guidelines that it would make special provisions for domestic companies to issue and list shares overseas. The position is to clearly state the oversight responsibilities of the official authorities.

The amendments will also strengthen the security responsibilities of overseas listed companies by completing regulations regarding overseas stock issuance and listing, data security, cross-border data distribution, and confidential information management as soon as possible.

Zero tolerance policy

Further, the zero tolerance policy will severely punish various illegal activities connected with the securities market.
As a result, it was decided to increase the number of investigative personnel in both public safety and prosecuting agencies, as well as the organization.

Currently, there is no explicit requirement for Chinese companies to obtain permission from the authorities before listing on foreign stock exchanges, such as those in the United States. Thus, it is interpreted that the guidelines refer to the preparation of such specific regulations and punishment provisions in the future.

For MetaNews.

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