NEW YORK – Chinese corporations hoping to sell their shares in the United States will have to start further disclosing their potential dangers before U. S. regulators allow them to rate their shares.
The Securities and Exchange Commission announced the resolution on Friday after Beijing announced it would oversee Overseas-listed Chinese companies, adding that it will review their cybersecurity.
SEC Chairman Gary Gensler highlighted Chinese corporations that use shell corporations to circumvent Chinese regulations that block foreign ownership for their industries.
From these agreements, the Chinese corporate bureaucracy is a cover-up company in the Cayman Islands or elsewhere. The shell company then sells its shares to investors after a board of directors in New York.
The front company owns the Chinese company. Instead, you have service contracts with her. These arrangements are called variable rights holders or “EDDVs”.
“I’m afraid the average investor wouldn’t possibly realize they have shares in a shell company than in an operating company based in China,” Gensler said.
Gensler said he had asked SEC staff to make sure those corporations made multiple disclosures before an initial public stock delivery, including: They will have to make it clear that investors are buying shares of the shell company, not of China-based operations. company, and that the long-term actions of the Chinese government can simply return monetary in particular.
Gensler also said that all Chinese corporations attempting an IPO in the U. S. U. S. They will have to reveal the dangers of approvals through the Chinese government to be listed on a U. S. stock exchange. U. S. They can simply be cancelled, among other things.
Several major Chinese companies have noticed their shares falling recently as Beijing has beefed up the coverage and security of its data.
Shares of U. S. -listed rideshare company Didi GlobalU. S. , for example, have fallen since they began trading in June. its online point-of-sale application while reinforcing the security of visitor information.
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