China sets new rules for domestic companies going public overseas

China's securities regulator, the China Securities Regulatory Commission (CSRC), has released new rules governing the overseas listings of domestic companies.

According to the rules announced late Friday, companies must comply with national security measures and personal data protection laws before they can go public overseas.

The rules are set to take effect from March 31, and companies or individuals that violate them by sharing misleading information might be fined up to 10 million yuan ($1.5 million).

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Zeekr, a premium electric car brand under China’s Geely, has confidentially filed for an initial public offering in the United States. If the IPO goes through, it will be the first major Chinese listing in the country in nearly two years, following China’s effective ban on foreign IPOs. The EV

TechloyAcquah Nana Yeboah

The new rules do not ban the variable interest entity (VIE) structure that is commonly used by Chinese companies to list in the US through a shell company, usually based in the Cayman Islands.

Additionally, IPO underwriters, typically international investment banks, will be required to report their involvement with Chinese listings overseas annually.

This announcement follows other measures China's government has put in place in recent years to protect national security and personal data. After an 18-month lull in overseas listings, more Chinese companies are returning to the US IPO market this year, despite China's increasing regulatory scrutiny.

Last year, US regulators said they were able to review the audit work papers of Chinese companies listed in the US, substantially reducing the risk of delisting.