On December 24, the CSRC publicly solicited opinions on the relevant systems and rules of overseas listing, and made it clear that the filing management shall be implemented for the overseas listing activities of domestic enterprises. On the premise of abiding by domestic laws and regulations, vie structure enterprises that meet the compliance requirements can go abroad for listing after filing.
Experts interviewed by China Securities Journal said that the institutional arrangements related to overseas listing release three signals, that is, improving the regulatory system for overseas listing of enterprises is not a tightening of regulatory policies for overseas listing; Start with increment and arrange sufficient transition period for stock; The CSRC will establish a regulatory cooperation mechanism with the competent authorities of relevant industries and fields in China, and actively promote cross-border audit and regulatory cooperation.
make it clear that market expectations are not tightening policies
Experts believe that improving the supervision system for overseas listing of enterprises is not to tighten the supervision policies for overseas listing, but to promote the overseas listing of enterprises in accordance with the law by building a clear and stable supervision system. On the contrary, it reflects the firm determination to promote the expansion and opening of the capital market.
“Since this year, the securities and Exchange Commission (SEC) has promulgated the foreign company Accountability Act Implementation rules, individual enterprises announced to start delisting from the United States, which triggered different reactions and expectations of the market for overseas listing. In the above context, the CSRC solicited public opinions on the relevant systems and rules of overseas listing, which showed the attitude of the regulatory authorities to seek development in the opening up, provided clear, transparent and operable rules for enterprises’ overseas listing activities, and built a more stable and predictable institutional environment. ” Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, pointed out.
Dong Dengxin believes that the CSRC’s public solicitation of opinions on the systems and rules related to overseas listing mainly presents three highlights. First, timely release the heavy signal that the general direction of China’s capital market opening to the outside world has not changed, indicating that China’s capital market has consistently adhered to the position of opening to the outside world. Second, China’s regulatory authorities not only did not tighten the overseas listing policy, but respected the support signal of enterprises’ independent choice of listing places according to law and compliance. Third, overseas listing will be changed from administrative licensing to filing management, and a more inclusive and open regulatory model will be implemented. “We have improved the relevant systems and rules for overseas listing, released a firm signal of adhering to the opening-up, reassured enterprises and investors, and will also lay a foundation for cross-border law enforcement cooperation in the next step.” He said.
“China’s further standardization of overseas listing policy is not to restrict overseas listing activities. The continuous opening of the capital market will not change. The new regulations will promote standardized and legalized operation and better integrate with international standards.” Liu Xiangdong, Vice Minister of the Economic Research Department of the China Center for international economic exchanges, said.
The public consultation also reflects the consistency of the policy. The exposure draft specifies that the filing management shall be implemented for the overseas listing activities of domestic enterprises. According to the regulations, for the overseas listing of enterprises within the scope of laws and regulations involving foreign investment security review and network security review, before submitting the filing application, the enterprise shall apply for security review according to law.
“Previously, the CSRC has repeatedly expressed its support for enterprises to make use of the international and Chinese markets in accordance with the law. In addition to safety review, this exposure draft also defines several prohibited situations from the perspective of compliance and complements the shortcomings of the system. This fully reflects the continuity of the policy.” Liu Xiangdong said. “This will also release the signal of adhering to reform and opening up and tightening the ties of interests, and promote the standardized and healthy development of enterprises using overseas capital markets, which will help prevent the adverse effects of violations of laws and regulations, financial fraud and other damage to the international image of Chinese enterprises, boost the investment confidence of international investors, and better deal with the risks and emergencies of China stock companies.” Dong Dengxin pointed out.
The public consultation also responded to the recent hot topics in the market. “Recently, some media reported that Chinese regulators would prohibit vie Structured enterprises are listed overseas. The regulatory authorities made it clear that on the premise of complying with domestic laws and regulations, vie structure enterprises that meet the compliance requirements can be listed abroad after filing. In addition, the new regulations give a negative list and clearly set up a ‘traffic light’ to clarify the situation that overseas listing is not allowed, which is conducive to building a more stable and predictable institutional environment for overseas listing activities of enterprises. ” Tian Lihui, Dean of the Institute of financial development of Nankai University, said.
starting from increment, reasonably define the filing scope
Experts believe that the highlight of the system design is also reflected in the fact that the reform can be divided into stock increment and the relevant arrangements for the transition period are set. Which enterprises should be included in the scope of filing is reasonably defined according to the principle of substance over form, combined with factors such as financial impact, composition of senior executives, business place and so on.
According to the relevant person in charge of the CSRC, in terms of system design, first, start with increment. For incremental enterprises and stock enterprises with refinancing activities, perform filing procedures as required; The filing of other stock enterprises that have been listed abroad will be arranged separately, and a sufficient transition period will be given. Second, distinguish between IPO and refinancing. Fully considering the characteristics of convenient and efficient refinancing in the overseas market, differentiated institutional arrangements have been made for refinancing in terms of filing time, filing material requirements, etc., which are well connected with the practice of the overseas market, so as to reduce the impact on the financing activities of overseas listed enterprises.
For those whose registered place is not within China, which enterprises should perform the filing procedures with the CSRC for listing abroad, the draft for comments has also been clarified. Enterprises that meet the following conditions at the same time shall be filed, that is, the domestic operating income exceeds 50%, most of the executives are Chinese citizens or their habitual residence is located in China, and their main business place is located in China. In addition, the principle of substance over form shall be followed in the judgment. If the above situations are not met at the same time, it is necessary to make a comprehensive judgment according to the principle of substance over form in combination with the specific situation of the enterprise. The core of the above system design is to reasonably determine the boundary of “domestic enterprises”. Multinational companies with their main markets or businesses in China do not belong to the scope of filing. At the same time, in accordance with substance over form, it can also prevent regulatory arbitrage.
“Distinguish between stock and increment, start with increment and set transition period arrangement, which reflects the general tone of steadily and orderly promoting the implementation of reform. The reform adheres to the principle of non retroactivity of law, which can stabilize market expectations and better ensure the smooth implementation of filing management.” Dong Dengxin said.
Liu Xiangdong said that clarifying the specific standards and the principle that substance is more important than form can reasonably define the scope of filing, which is in line with the actual situation of stock concept in overseas listing and is also conducive to the smooth implementation of filing management.
strengthen regulatory coordination and improve filing efficiency
Experts believe that the reform also released a signal to strengthen cross sectoral regulatory coordination.
On the one hand, clarify regulatory responsibilities and strengthen regulatory coordination. Clarify that the securities regulatory authority under the State Council shall supervise and administer the overseas issuance and listing activities of domestic enterprises, and the relevant competent departments under the State Council shall strengthen the supervision and administration of relevant enterprises and service institutions according to their duties. Establish a regulatory coordination mechanism for overseas listing, and strengthen regulatory coordination between the securities regulatory authority under the State Council and the competent industry departments in terms of policy formulation, daily supervision and risk response. The filing management of overseas listing shall be well connected with the safety review mechanism, and it shall be clear that if the overseas issuance and listing involves safety review, the safety review procedures shall be performed according to law.
On the other hand, we should improve cross-border securities regulatory cooperation arrangements. Establish a filing information notification mechanism with overseas securities regulators, strengthen cross-border securities supervision and law enforcement cooperation, and jointly crack down on cross-border violations.
In addition, strengthen legal compliance constraints. Clarify the main responsibilities of enterprises and intermediaries to comply with laws, maintain national security and keep state secrets. Implement the disclosure of filing information and strengthen social supervision. Clarify the legal responsibility for illegal acts such as overseas listing without performing the filing procedures, and pursue responsibility through administrative penalties, integrity archives and other measures to increase the cost of violations.
The relevant person in charge of the CSRC pointed out that in order to ensure the smooth implementation of filing management, the CSRC will establish a regulatory cooperation mechanism with the competent departments of relevant industries and fields in China, strengthen policy convergence, information sharing and regulatory coordination, and will not require enterprises to take “road signs” and run for approval in multiple departments, so as to reduce the regulatory burden of enterprises as much as possible.
“The introduction of the overseas listing system solicits wider opinions according to various processes, reflects the opinions and demands of various stakeholders, and is an important link in the more mature and perfect China’s capital market system.” Liu Xiangdong said.
“The CSRC will take the lead in establishing a cross departmental regulatory coordination mechanism for overseas listing of enterprises, which will effectively improve the filing efficiency; cooperate with and promote relevant competent departments to clarify the regulatory systems and rules in relevant fields, and will also improve the predictability of policies.” Dong Dengxin said.
(China Securities Journal)
