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China tightens scrutiny on offshore listings in sectors off-limits to foreign funding

Financial system1 hour within the past (Dec 27, 2021 03: 55AM ET)

© Reuters. FILE PHOTO: A China yuan conceal is seen in this illustration impart Might perchance perchance 31, 2017. REUTERS/Thomas White/Illustration

SHANGHAI (Reuters) -The Chinese authorities will now require that domestic companies in certain sectors procure clearance from regulators ahead of they are able to checklist outdoor mainland China.

At the moment, many Chinese companies impart a so-called variable hobby entity (VIE) structure to circulate in a foreign nation, skirting foreign funding restrictions in sectors comparable to media and education.

The National Vogue & Reform Commission (NDRC) moreover acknowledged on Monday that foreign stakes in such companies must aloof be capped and foreign capital mustn’t be concerned on the operation and administration of such companies.

The NDRC assertion comes correct days after China’s securities regulator printed draft rules requiring filings by companies trying to procure offshore listings to be certain they follow Chinese criminal pointers and regulations.

Under the brand new filing machine, VIE-structured companies will aloof be allowed to checklist as prolonged as they’re compliant.

“The NDRC assertion goes hand in hand with the filing machine,” acknowledged Zhan Kai, a attorney at East & Harmony Partners.

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