May 11, 2018

CSRC amended its first draft consultation on the issuance and trading of China Depository Receipts. The regulatory requirements and the basic rights and obligations of the participating entities provide an institutional basis for the innovative enterprises to return to the domestic capital market through the issuance of depository receipts. CSRC is soliciting comments on the revised draft rules by June 10, 2018.

The amendments mainly involve the following four aspects:

  • The first one addresses the scope of application of the existing Securities Law to the China Depository Receipts.
  • The revisions introduced more flexibility for the pricing of China Depository Receipts, cancelling the requirement that companies with issuance size of less than 20 million shares should engage in direct pricing and allows them to choose their own pricing method.
  • Another amendment targets speculation in the China Depository Receipts and stipulates that offline instruments subject to a lock-in period cannot participate in online call-back mechanisms. Strategic allotment or over-allotment options are also allowed to make it easier to control the online and offline allocation structure and to stabilize the market and curb speculation.
  • The fourth amendment clarifies information disclosure requirements for unprofitable company valuation indicators.

The China Securities Depository and Clearing Corporation, the Shanghai and Shenzhen Stock Exchanges, and the Securities Association of China will be synchronized to amend the relevant business rules.

 

Related Links (in Chinese)

Comment Due Date: June 10, 2018

Keywords: Asia Pacific, China, Securities, Depository Receipts, Disclosure Requirements, Investor Protection, CSRC

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