New Disclosure Standards for FICLS Prospectuses

By Philip Gregory, Associate, Freshfields Bruckhaus Deringer, Hong Kong, with Tim Steinert, Hong Kong, and Zhou Yun, Shanghai

On March 19 2002 the China Securities Regulatory Commission (the CSRC) introduced regulations requiring increased disclosure in prospectuses issued by foreign invested companies limited by shares (FICLS). The Contents and Format of Propectuses of Foreign-funded Companies Limited by Shares Special Provisions (the Provisions) set out in the CSRC, Rules for the Compilation and Submission of Information Disclosures by Companies That Offer Securities to the Public No.17 supplement the PRC Securities Law  (中华人民共和国证券法) (the Securities Law) and existing CSRC regulations governing prospectus disclosure by PRC companies. The stated aim of the Provisions is to "safeguard the legitimate rights and interests of investors". The somewhat unsettling conclusion to be drawn from the Provisions is that, in order to achieve this aim, more stringent disclosure requirements need to be applied to FICLS, particularly their foreign investors, than to other PRC companies.

Key Provisions