Equities regulators in China add more rules for issues selling global depositary receipts or GDR receipts overseas. They have considered introducing the rules after the increased number of Shanghai and Shenzhen company listings. Based on market participants’ information, regulators plan to design criteria that would include the number of years a potential issuers have been listing in the A-share markets. In addition, they are also considering the minimum fundraising size for overseas GDRs.
In three years listing, there has been a speculation that there might be a three year duration requiring Chinese issuers not to take a GDR. Then, there is only a period of a year for technology companies listing on the Star market. This is according to Ivy Wong, a Baker McKenzie in Hong Kong and Asia Pacific chair of the firm’s capital market. Meanwhile, bankers focusing on GDR listings argued that the period would take around two to three years. A Beijing banker also said that there is no decision yet but the relevant rules would be announced soon. GDR offerings have gotten pace since China allowed Switzerland and Germany to participate in the Shanghai-London Stock Connect trading link.
The plan was to create a closer tier to European capital markets. In addition, it may expand eligibility criteria to some Shenzhen-listed companies. So far, this year only, there have been six A-share listed Chinese companies having sold GDRs in Switzerland and London. Plus, there are around 18 Chinese issuers planning to sell GDRs in Switzerland or London. The latest Swiss GDR listing plan arrives from Shenzhen-listed Shanxi Meijin Energy.
