Draft law shows support for orderly development of overseas listings

The China Securities Regulatory Commission published draft regulations on domestic enterprises issuing securities and being listed overseas on Friday to solicit opinions.

This move should serve to dispel the market's misgivings that the central authorities are discouraging enterprises from listing overseas.

Foreign stock markets represent an important channel for Chinese enterprises to utilize foreign capital, prompting them to improve corporate governance and integrate into the world economy, and for foreign investors to share China's development dividends.

The draft regulations show that the central authorities' support for Chinese enterprises to be listed on foreign stock markets remains unchanged. But they will upgrade the supervisory institutions and strengthen the authorities' supervision over these enterprises as the current regulations on enterprises being listed on foreign exchanges date back to 1994.

Some Chinese companies have taken advantage of the loopholes in the current regulations to cover up problems in their corporate governance and their true financial status in the process of their being listed in foreign stock markets, resulting in negative influences on the overall image of Chinese companies.

The new regulations will provide clearer, more transparent and practical rules for the overseas listings of Chinese companies so as to help them achieve healthier and more sustainable development in foreign markets.

According to the draft regulations, it will become compulsory for all relevant Chinese enterprises to register their overseas listing activities with the CSRC, and enterprises will have to undertake the primary responsibilities of providing reliable information and ensuring their overseas listing activities meet relevant rules and laws at home and overseas.

Notably, the draft regulations clearly draw up a negative list, banning enterprises from being listed on foreign stock markets if doing so violates relevant laws, threatens national security or causes serious ownership disputes. That is crucial to striking a balance between opening-up and national interests.

Drawing the redline in this field is conducive to making qualified enterprises assured of the authorities' support for their overseas listings, and also protecting the legal rights and interests of investors at home and abroad.

Hedging the uncertainties of the external environment with institutional certainty fully demonstrates China's firm determination to place equal emphasis on regulation and development, and to further open up its capital market.

ECONOMIC DAILY