![]() Many of China’s technology firms have near-monopolies in their fields and vast pools of user data, and the Chinese Communist Party appears intent on making sure sensitive data can’t be accessed by foreign regulators. Companies holding data on at least 1 million people also have to undergo cybersecurity and national security reviews. Those in industries banned from foreign investment need to seek a waiver before listing. Any firm whose listing could pose a national security threat won’t be allowed to proceed. This category includes e-commerce giant Alibaba Group Holding, which raised US$25 billion in a 2014 debut listing on the New York Stock Exchange, at the time the world’s biggest-ever IPO. ![]() The requirements apply to new shares only and won’t affect the foreign ownership of companies already listed overseas. New rules unveiled in December require all Chinese companies seeking initial public offerings or additional share sales abroad to register with the securities regulator. The SEC said that while more than 50 jurisdictions work with the PCAOB to allow the required inspections, two historically have not: China and Hong Kong. Rules developed by the US Securities and Exchange Commission to carry out that law require that audits done for Chinese companies be made available for inspection by the US Public Company Accounting Oversight Board, a quasi-governmental body created by Congress two decades ago to improve the integrity of audits.Ĭhina has refused to let the PCAOB examine audits of its firms, citing national security concerns. Under a law signed by former president Donald Trump a month before he left office, Chinese companies may face delisting starting in 2024 if they refuse to show financial information to American regulators. Ride-hailing giant Didi Global said it would withdraw from the New York exchange, a stunning reversal as it yielded to demands from Chinese regulators. All this has changed due to actions by both countries. The money flow was profitable for company founders, bankers, early investors and new shareholders. Chinese companies in need of capital have long headed to the US stock market to tap deep-pocketed investors, raising more than US$100 billion in first-time share sales over the past two decades.
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