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China publishes final rules for Big Tech listings trial programme

[BEIJING] China published final rules of a trial programme for securities that would allow companies such as Alibaba Group Holding Ltd to list on domestic exchanges, a major step in the country's push to bring some of the world's biggest technology firms back home.

The China Securities Regulatory Commission (CSRC) unveiled the details on its website late Wednesday. The regulations are broadly in line with published draft proposals. The State Council, China's equivalent of a national cabinet, announced the China depository receipts (CDR) trial programme in March.

The rapid development of a framework for CDRs highlights policymakers' determination to find a way to have the likes of Alibaba and Baidu Inc list in China. Most of the country's tech giants have gone public in New York or Hong Kong to better access international capital, leaving the local market reliant on state-run industries. First mooted in February, CDRs are now available for trial in the world's second-biggest market.

The final rules came faster than expected and demonstrated the regulators' support of the business, Huatai Securities Co analysts led by Shen Juan wrote in a note on Thursday. Most of the pilot companies' CDR issuance could be completed by year end, they wrote.

The programme could have global implications. While the likes of Alibaba and Tencent Holdings Ltd have headed overseas, the prospect of at least a secondary listing in China could significantly boost their valuations and set an example.

Companies that went public overseas and have a market value of more than 200 billion yuan (S$41.7 billion) can apply for CDRs, and corporate structures not permitted in China will be allowed. Funds raised with the listings can be moved offshore, according to the CSRC.

Wednesday's rules added further requirements, including that companies must have generally accepted accounting standards and healthy inner control measures, and that directors and senior executives must have good reputations and no significant legal blemishes. The regulator said it will strictly control the number of companies and amount raised in the CDR trial, and said it "hopes" that the market won't engage in speculation.

The CSRC also published revisions to related rules including those governing initial public offerings. The changes exempt unprofitable pilot companies from a clause that suspends the sponsor's licence for three months if a firm reports a loss for the year it went public.


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