Recent Developments in the CSRC Filing Regime for Overseas Listing

Summary

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• The rules on overseas listing of domestic Chinese operating companies have significantly changed
• A filing-based approach has been adopted
• One important new rule relates to overseas listing bans
• Other changes include higher disclosure requirements on the main shareholders and a prerequisite for cybersecurity review where applicable

On March 31, 2023, the overall regulatory landscape with respect to the overseas listing of PRC operating companies changed significantly. This was marked by the coming into effect of the Trial Measures for the Administration of the Offshore Offering and Listing of Securities by Domestic Enterprises (境内企业境外发行证券和上市管理试行办法) and five supporting guidelines (the "CSRC Filing Rules") released by the China Securities Regulatory Commission (the "CSRC") on February 17, 2023.  The CSRC Filing Rules adopted a filing-based approach instead of the former approval-based approach for direct overseas listing (i.e. H-share issuers), while simultaneously imposing the same filing-based review regime on companies going for indirect overseas listing (i.e. red-chip or VIE structured issuers). As a result, for the first time in history, indirect listing applicants have been brought within scope of PRC regulatory oversight.  As of March 28, 2024, 134 potential IPO applicants have completed filing with the CSRC. Among that total, 43 IPO applicants are domestic companies looking for direct overseas listing and 74 are red-chip or VIE structured companies looking for indirect overseas listing.

These two tests are intended to exclude applicability to those multinational issuers with a less significant section of their business operations in mainland China