New CSRC Rules Allow Overseas-listed Chinese Firms To Raise Money At Home

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China’s securities regulator China Securities Regulatory Commission (CSRC) has issued trial rules for issuance and trading of Chinese Depositary Receipts (CDRs), similar to ADRs in the U.S.

The rules, which will be effectively immediately, pave ways for overseas-listed Chinese tech giants, including Alibaba, Tencent and Baidu, to list domestically.

The CDR program targets companies from sectors that align with China’s national strategy, including Internet, big data, cloud computing, artificial intelligence, software, integrated circus, advanced manufacturing and biotechnology.

Eligible companies should meet conditions including continuous operations for more than three years, no change of actual controller in the last three years. Companies that are already listed overseas should have a minimum market capitalization of RMB200 billion (US$31.3 billion).

Companies that have not yet been listed overseas should have audited revenue of no less than RMB3 billion (US$469 million) in the most recent year and a valuation of no less than RMB20 billion (US$3.13 billion). Or, the companies need to demonstrate an "obvious technological advantage" with a compound growth rate of more than 30% for the most recent three years, and revenue of no less than RMB1 billion (US$156 million) in the most recent year.

The CSRC said it will strictly control the number of companies approved for the CDR program and the amount of money they raise, and the timing and pace of CDR issuance.

The CSRC also released amended rules on initial public offerings and measures to support innovative firms in their domestic issuance of stocks or CDRs.


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