China will propose new regulations to block companies with large amounts of sensitive consumer data from floating shares in the U.S., Dow Jones reported, citing people familiar with the matter.
China’s stock market watchdog has told companies and investors the envisioned rules will prohibit firms from listing abroad, particularly those seeking a foreign IPO via overseas-incorporated entities. Sectors with less sensitive information, such as pharmaceuticals, remain likely to win approval for an IPO, Dow Jones reported.
The regulations could be finalized and implemented only around the fourth quarter, so the agency has asked some companies to suspend IPOs till then, the newspaper added.
Beijng has since July all but frozen the once-thriving pipeline of U.S. IPOs by Chinese firms. That month, the powerful internet industry overseer launched a cybersecurity probe into Didi Global Inc. and decreed that any company holding data on more than a million users now needs its approval when seeking listings in other nations.
That marked one of the most concrete steps taken yet to restrain the ability of technology firms to raise capital in the U.S. through a so-called Variable Interest Entity — an overseas-incorporated body — that the likes of Alibaba Group Holding Ltd. to Baidu Inc. and Didi have adopted. The Cyberspace Administration of China said in its July statement that it will work with different agencies to police data security and overseas listings.
Authorities have accelerated a crackdown against overseas listings after Didi was said to push ahead with its debut in June, despite being asked to delay the plans months prior. The State Council, China’s highest decision-making body, has said rules for overseas listings will be revised while publicly traded firms will be held accountable for keeping their data secure.
It remains unclear whether some companies may be exempt from the broader moratorium. Aichi Automobile Co., an electric-vehicle startup better known as Aiways, is exploring a U.S. initial public offering that could occur as soon as this year, Bloomberg News has reported. EVs play into one of Xi Jinping’s top priorities, environmental technology.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard .