The United States imposes additional requirements on Chinese companies that want to list in the US. Supervisor SEC does not allow any more companies from China unless they indicate the likelihood that the Beijing regime will take action against the company.
In this way, the SEC wants to protect American investors against stock market bullies.
This month things went wrong with Didi Chuxing. The Chinese taxi app went public in New York, despite objections from the Chinese authorities. The result: the Chinese internet regulator started an investigation that prevents the company from taking on new users, so the price of the debutant already collapsed on the first trading day.
After the debacle with the taxi app, several Chinese companies canceled their US IPO. Including data service provider LinkDoc Technologies from Beijing and the Shanghai share bike app Hello declined to launch on Wall Street.
Mailbox in the Cayman Islands
China is trying to restrict Chinese companies that collect money from investors outside of China. In some sectors, companies are already not allowed to have foreign owners or shareholders and are not allowed to be listed on a foreign exchange.
To circumvent those rules, the companies set up letterbox companies outside of China, for example in the Cayman Islands. China also wants to limit that, the head of the SEC writes in a press statement. To protect American investors, he therefore wants Chinese companies that want to go public in the US to make more information public.
For example, they must make it clear that investors do not buy shares of the Chinese company, but of the letterbox company. In addition, the company must clarify whether the Chinese company has permission from the Chinese government to go public in the US. There will also be extra checks for companies with many activities in China that want to go public.
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