On Saturday, the China Securities Regulatory Commission (CSRC), together with three other government departments, have released revisions to 2009’s confidentiality rules involving legal offshore listings.
In light of recent problems related to overseas listings, this revision plans to make the following adjustments to the original regulations:
First, improve the legal basis of the regulations. Second, adjust application scope of the regulations to cast a much broader net. Together with the offshore listing guidance issued by the State Council, both documents can be applied to direct and indirect listings overseas.
Third, clarify the information security responsibilities of domestic enterprises, and provide clearer guidance for domestic enterprises and securities in confidentiality and file management during the overseas listing process. Fourth, provide institutional guarantees for safe and efficient cross-border regulatory cooperation.
The CSRC is emphasizing that it firmly supports enterprises to choose their own listing places according to their own needs. The revision aims to clarify the information security responsibilities of listed companies, safeguard national information security and improve the efficiency of cross-border regulatory cooperation.
In the Q&A portion of the document, the CSRC stated that overseas regulatory agencies should conduct investigations and evidence collection or inspections in China through the cross-border regulatory cooperation mechanisms. At the same time, the CSRC and other domestic departments will provide necessary assistance.
On Friday, Pandaily reported that a WeChat screenshot reportedly from David Zhang, founding managing partner of Matrix Partners China confirmed that the CSRC was holding meetings with the Chinese units of the global “big four” accounting firms. The meetings were in regard to auditing inspections by the US over Chinese firms listed on US-based exchanges. Chinese authorities are preparing to give US regulators full access to the auditing reports of the majority of the 200-plus companies listed in New York as soon as the middle of this year. This arrangement of audit and regulatory cooperation between the two countries will resolve the delisting risk for US-listed Chinese firms and will normalize in the future.