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China to curb speculation around backdoor listings: paper
[SHANGHAI] China's securities regulator will tighten regulations on major restructurings by listed companies to curb speculation around shell companies used for backdoor listings, the official Securities Times reported on its website.
The rules are expected to make it more difficult for Chinese companies listed abroad to relist in China after privatisation, a trend partly triggered by arbitrage opportunities from the valuation gap between Chinese and overseas stock markets.
The China Securities Regulatory Commission (CSRC) will bar companies from raising money from external sources in backdoor listings, in a bid to ensure financial strength of the parties involved, the newspaper said, citing draft rules published for public feedback.
Meanwhile, the lock-up period of new shareholders in the restructured listed companies would be extended to 24 months from 12 months, to prevent short-term speculation, the paper said.
In addition, controlling shareholders cannot sell their listed companies as "shells" if they broke rules or laws during the past three years, it said.
Separately, CSRC also published risk-management rules on brokerages after public consultation.