The Wall Street Journal (WSJ) reported on the 27th that the Chinese government, which tightens regulations and pressure on big tech, is pushing to ban companies that hold large amounts of consumer personal information from listing on the U.S. stock market.
Citing multiple officials familiar with the situation, the newspaper said Chinese authorities are planning new regulations to prevent their IT big tech companies from offering new shares in the U.S.
China’s move could effectively prevent Chinese technology companies from being listed overseas, the media said.
In the past few weeks, the China Securities Supervisory Commission has informed some companies and foreign investors that the new regulation will ban Internet companies with large amounts of user-related data from being listed overseas, officials said.
Officials explained that the measure is aimed at companies that promote overseas listing through subsidiaries established overseas.
However, it is said that companies with less sensitive data such as the pharmaceutical industry are likely to receive approval for overseas listing.
The regulation will help authorities more strongly manage the complex corporate structure used by large Chinese technology companies to avoid regulations on foreign investment, the media pointed out.
China’s leadership regards the Internet, telecommunications and education sectors as classified in political or national security concerns.
Big Tech, such as Alibaba, the largest e-commerce company, Didi Chuxing, a car sharing service, and Tencent HD, an Internet service, is attracting foreign capital through a corporate structure called VIE (flexible profit entity) and is listed overseas.
The new regulations establish a system that obliges companies to obtain formal approval from committees that transcend departments established months later when they make IPOs abroad.
Currently, Chinese private companies that employ VIE structures do not require the approval of increase or decrease meetings when listed in the U.S. However, it is often approved in response to requests from the Chinese authorities.
Although the regulatory measures have yet to be finalized, the meeting will be implemented in the fourth quarter of October and December, and it has been reported that Chinese companies have ordered them to refrain from IPOs overseas.
