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New CSRC Regulations Restrict Chinese Companies Overseas Listings from Endangering National Security

The China Securities Regulatory Commission (CSRC) issued a new regulation for overseas listings of domestic companies which explicitly prohibits those overseas listings that may endanger national security and prohibits enterprises from leaking state secrets.

On March 17, CSRC’s official website released the “Trial Measures for the regulation of Overseas Listings and Securities Issuance for Domestic Enterprises,” with five guidelines,

The measures are to be implemented on March 31.

The “Trial Measures” specify that enterprises to be listed overseas should comply with the laws pertaining state secrets and should not disclose state secrets and secrets of state organs.

Companies cannot issue stocks outside China under five scenarios. First, the sectors that laws and regulations explicitly prohibit the listing or financing. Second, authorities under the State Council determine that listing abroad may endanger national security. Third, enterprises or their controlling shareholders or the actual controller are found to have committed corruption, bribery, misappropriation of property, or criminal offenses against the socialist market economic order within the last three years. Fourth, the enterprise is suspected of crimes or major violations of the law and is under investigation. Fifth, there is a major ownership dispute involving controlling shareholders or the actual controller.

The “Trial Measures” also mentioned that enterprises listing abroad should comply with national security laws regarding foreign investment, network security and data security, and “fulfill their obligations to safeguard national security.” “Enterprises should take measures such as timely rectification or divestment of assets in accordance with the requirements of the Chinese authorities to avoid impacting national security in their overseas listings.”

Source: Central News Agency (Taiwan), February 18, 2023