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Policy · Equity
China Depositary Receipts’ listing rules announced for tech giants
2018/06/07 03:49:46

Jun 07, 2018 (China Knowledge) - China Securities Regulatory Commission (CSRC)has released official rules on the issuance and transaction of Chinese depositary Receipts (CDRs) yesterday, paving the way for large offshore-listed Chinese technology companies to list on the Mainland stock exchanges.

It further states that issuing depositary receipts in domestic capital markets is not just a supply-side structural reform, but also allows for the transformation and upgrading of economic structures and the enhancement of quality of listed companies. This is in line with the country’s strategies to support innovative companies that have mastered key technologies.

Furthermore, it will also promote the reform and opening up of Chinese capital market and give better autonomy to the financing mechanism of the capital market, it said.

Applicants are required to have matching accounting standards and healthy internal control measures. Within organization, corporate directors and senior executives need to have good reputation and no significant dishonest records.

The regulator further stressed that it will strictly control the number of innovative enterprises participating in the pilot CDR program and the volume of funding, and properly arrange the timing and pace of issuance. It also indicated that it has set strict selection criteria for pilot enterprises, after being prudently verified by sponsors with experience. It hopes that all parties in the market will make rational investments and not speculate following the market hype, in order to jointly push forward the smooth development of the pilot work.

The pilot program would allow domestic investors to access to offshore-listed tech giants such as Alibaba, Baidu and JD, through the CDRs, modeled on the popular ADRs used in the United States.

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