U.S. SEC to impose new regulations on Chinese firms’ IPO disclosures
Category: #business |   By Pankaj Singh |   Date: 2021-08-25

U.S. SEC to impose new regulations on Chinese firms’ IPO disclosures

The United States Securities and Exchange Commission (SEC) is reportedly issuing new disclosure requirements for Chinese companies looking to list on the New York Stock Exchange, to make investors aware of all the risks involved in the investment.

Certain Chinese companies have been receiving directives from the SEC about in-depth disclosure of offshore fund vehicles called variable interest entities (VIEs), which they use for initial public offerings in the U.S.

The companies are also required to specify the implications of VIEs for investors, and also mention the likelihood of Chinese authorities interfering with company operations.

In July, SEC Chairperson Gary Gensler had asked for a pause in U.S. IPOs of Chinese firms, seeking more transparency about such problems. Following the SEC freeze, Chinese listings in the country were discontinued.

Notably, during the first seven months of 2020, such listings had captured a staggering USD 12.8 billion, as Chinese firms took advantage of the surging U.S. stock market.

According to sources, an SEC letter to Chinese companies asked them to describe how their corporate structures might affect investor interest and investment values including how and why such contractual agreements might become less effective as compared to direct ownership.

Several Chinese VIEs are located in tax havens like the Cayman Islands. Gensler has commented that the specifics about how money flows through these entities are highly difficult to determine.

In this context, the SEC will also require a disclosure stating that investors might never directly own equity shares in the Chinese operating companies.

The SEC’s decision represents the latest onslaught by U.S. authorities on corporate China, which has long frustrated Wall Street with its refusal to comply with U.S. auditing standards. The Commission is also working towards finalizing the rules on delisting Chinese firms that do not adhere to auditing requirements in the U.S.

Source Credits –

https://londonnewstime.com/exclusive-sec-provides-chinese-companies-with-new-requirements-for-us-ipo-disclosure-by-reuters/417960/

  • shareShare
  • Twitter
  • Facebook
  • LinkedIn


About Author

Pankaj Singh     Twitter

Pankaj Singh

With a commendable experience of content creation under his belt, Pankaj Singh, a qualified Post Graduate in Management, boasts of having worked as a freelance writer and an insurance underwriter. Additionally, Pankaj has also enriched his qualification portfolio with Read more...

More News By Pankaj Singh

Reliance Jio becomes the largest buyer of India’s USD 19 Bn 5G sale

Reliance Jio becomes the largest buyer of India’s USD 19 Bn 5G sale

By Pankaj Singh

Reliance Jio Infocomm Ltd., owned by billionaire industrialist Mukesh Ambani, was found to be the most aggressive participant in the government-backed 5G auction in India where several telecom behemoths agreed to invest at least USD 19 billion. Jio w...

Mercedes-Benz to roll out level 3 self-driving technology in the U.S.

Mercedes-Benz to roll out level 3 self-driving technology in the U.S.

By Pankaj Singh

Mercedes-Benz is among the top automobile manufacturers in the world when it comes to the adoption of cutting-edge technologies. To that effect, the German luxury automaker is ready to roll out Drive Pilot, a Level 3 autonomous driving system, in U.S...

upGrad merges Harappa Education to establish Leadership in Enterprise Learning in India

upGrad merges Harappa Education to establish Leadership in Enterprise Learning in India

By Pankaj Singh

Mumbai/New Delhi, July 22, 2022: upGrad, Asia’s largest integrated higher Edtech major has announced a 100% merger of Harappa Education at a value of INR 300crores (USD 38 million). Harappa will clock INR 75 Cr in Revenue this year. u...