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Overview
On February 17, 2023, the China Securities Regulatory Commission issued six rules for the administration of overseas listing records, including the trial measures for the Administration of overseas issuance and listing of domestic Enterprises and five supporting guidelines (collectively referred to as the "New rules on overseas listing" or "New rules for filing"). The new rules for filing will come into effect on March 31, 2023.
The new rules for filing have been successfully implemented for a year, simplifying the procedures for Chinese companies to list in the United States, and helping enterprises to avoid "detours" in overseas listings. more and more Chinese companies are focusing on the US stock market, and the activity of Chinese companies listing in the US capital market in 2024 may usher in a new breakthrough.
I) the completion of the new rules for filing since its implementation
After the implementation of the new rules for filing, according to the public information on the official website of the CSRC, as of April 22, 2024, a total of 247 domestic enterprises had applied for overseas initial public offerings or full circulation for the record. among them, 57 domestic enterprises listed in the United States have completed the filing (see figure 1), and 76 domestic enterprises listed in Hong Kong have completed the filing (see figure 1). The examination process and approval speed of filing since the second half of 2023 have been significantly accelerated.
II) the filing process and timetable for listing in the United States
According to the statistics published by the China Securities Regulatory Commission, the average time it takes for companies listed in the United States to complete the filing is 128 days. In view of the fact that secret exchanges (confidential filing) are allowed in the listing of US stocks, the new rules on overseas listing allow companies to apply for postponement of public filing. The IPO filing process and schedule for US stocks are shown in figure 2:
Note: according to the trial measures for the Administration of overseas issuance and listing of domestic Enterprises and five supporting guidelines
III) requirements for filing materials for listing in the United States
After the implementation of the new regulations on overseas listing, domestic enterprises are required to submit a series of filing materials to the CSRC for indirect overseas initial public offering or listing (see figure 3):
Note: collate and analyze according to the guidelines on the Application of Regulatory rules-overseas issuance and listing No. 2: guidelines on the content and format of filing Materials
IV) the CSRC focuses on the issues of listing in the United States for the record.
By combing the supplementary material requirements that have been publicized by the CSRC, we have sorted out the following high-frequency "examination sites":
Equity structure
The change of ► equity and the compliance of the establishment of relevant equity structure
Structure and funding sources of the actual controller / major shareholder of the ► applicant
VIE architecture
► VIE protocol controls the specific transaction arrangements between related parties under the framework
Compliance with the establishment of the ► VIE protocol control framework and the actual implementation of foreign investment restrictions or prohibitions
► fund flow matters, profit transfer arrangements, etc.
Shareholder
Shareholder information and shareholder penetration of ► holding more than 5% of shares or voting rights
The relationship between ► and other shareholders who hold more than 5% of the shares or voting rights
Is there any stock ownership in ►?
The payment of new shareholders in ► in the last year
Financial concerns
The reason and rationality of the high concentration of ► suppliers and customers
► related party transactions
The main considerations, principles and overall arrangements for the divestment and listing of ► assets or businesses
► major debt repayment risks, major guarantees, litigation, arbitration and other contingent matters
Are there any matters that have a significant adverse impact on continuous operation in ►?
Data security
Whether there are related data information security risks in ►
The situation and scale of personal information collected, used, analyzed and stored by ►
Whether the arrangements or measures taken by ► for personal information protection and data security are in line with national laws and regulations such as personal information protection.
Business Compliance
Does ► obtain the appropriate license (Kim Kirin analyst) or qualification in its business field?
Whether there is commercial bribery in ► and whether it violates the relevant laws and regulations of anti-monopoly and anti-unfair competition.
Equity incentive
The content of ► incentive plan, including the principle of establishing exercise price, the object of incentive, whether to set reserved rights and interests, foreign exchange and other domestic regulatory procedures.
The background, price, rationality and basis of equity incentive for ► outsiders, and whether there is benefit transfer.
Does the ► controller, Dong Jiangao and his related parties provide financial support for employees to subscribe for shares?
This article is written for the purpose of providing general information and is not intended to be reliable accounting, tax, legal or other professional advice. Please ask your consultant for specific advice.
