Going Public: New Rules Allow Listing of FIEs
December 31, 2001 | BY
clpstaff &clp articlesTraditionally, foreign investment enterprises (FIEs) could only raise capital by means of bank loans and private equity placements. This restrictive capital-raising situation for foreign investment enterprises has now come to an end.
On November 8 2001, the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and the China Securities Regulatory Commission (CSRC) jointly issued Foreign Investment Issues Relating to Listed Companies Several Opinions (关于上市公司涉及外商投资有关问题的若干意见) (the Opinions). After being allowed to operate in China for the past 22 years, FIEs are now permitted for the first time to raise capital through public equity offerings.
The Opinions were issued for two specific purposes: to promote the healthy development of domestic stock markets, and to regulate the public offering and listing of FIEs. The issuance of the Opinions illustrates China's continued efforts in implementing the principle of national treatment for FIEs under WTO rules, i.e., allowing foreign enterprises the same business opportunities as domestic enterprises. In this sense, it was not by coincidence that the Opinions were issued just three days before China signed WTO documents in Doha on November 11 2001.
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