The securities regulator proposed on Friday afternoon that any company that wants to go public in another country must first register with the agency and then meet a set of requirements set by government officials.
“Domestic companies issuing and trading abroad must strictly comply with the relevant laws, regulations and provisions on national security, such as foreign investment, cybersecurity and data security, and seriously comply with their obligations. protection of national security, “the China Securities Regulatory Commission said in its proposal. .
He made it clear that companies could be barred from holding initial public offerings abroad if the authorities consider them a threat to national security, adding that companies may be forced to divest some assets “to eliminate or to avoid the impact of issuing and contributing abroad on national security. ” “
The draft rules, which are open to public comment until the end of January, come after weeks of speculation about when and how Beijing could tighten its control over IPOs. Washington has also enacted audit rules that could affect Chinese companies, a sign of continuing tensions between the United States and China.
The draft rules do not mention VIEs. But a spokesman for the regulator said in comments published on Friday that companies using this type of structure could still enter the list abroad, as long as they comply with government regulations and register with the regulator.
Even if Beijing does not completely close its doors to foreign exchange, the government has taken a number of measures this year that appear to be aimed at deterring Chinese companies from trading in foreign markets, which the country fears could pose a risk. for national security.
Authorities at the time accused Didi of violating privacy laws and posing risks to cybersecurity. Its actions were also widely seen as a punishment for the company’s decision to go public overseas rather than in China. In the weeks following the IPO, Beijing proposed that companies with data of more than 1 million users seek approval before trading abroad.
The pressure doesn’t just come from Beijing. Earlier this month, the U.S. Securities and Exchange Commission finalized rules that would allow it to withdraw foreign companies that refuse to open their books to U.S. regulators. China has for years rejected U.S. audits of its companies, citing national security concerns.
– CNN’s Beijing office contributed to this report.
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