Chinese regulator refutes reports of VIE listing ban, slams US clampdown on firms
Published: Dec 05, 2021 10:53 PM
A trader works at the New York Stock Exchange in New York, the United States, on July 13, 2018. US stocks closed higher on Friday. The Dow Jones Industrial Average rose 94.52 points, or 0.38 percent, to 25,019.41. The S&P 500 rose 3.02 points, or 0.11 percent, to 2,801.31. The Nasdaq Composite Index rose 2.06 points, or 0.03 percent, to 7,825.98. (File photo: Xinhua)

A trader works at the New York Stock Exchange in New York, the United States. (File photo: Xinhua)

China's top securities regulator said on Sunday that reports by certain overseas media outlets on a so-called ban on companies using the variable interest entity (VIE) structure seeking overseas listings and demands that Chinese companies delist from US stock exchanges are completely wrong.

The China Securities Regulatory Commission (CSRC) said in a statement on its website that relevant authorities in China have always been open to and fully respect Chinese companies' independent choices of overseas listing venues in compliance with relevant laws and regulations.

Some foreign media outlets' recent reports that Chinese regulators will ban overseas listings of companies with VIE structures and demand that Chinese companies delist from US stock exchanges are a complete misunderstanding and misinterpretation, said the CSRC. 

"As far as we know, some domestic companies are actively communicating with domestic and foreign regulators to seek listings in the US markets," the regulator said.

The CSRC's statement came after the US Securities and Exchange Commission (SEC) released its rules for implementing the Holding Foreign Companies Accountable Act last week and Didi Chuxing, the Chinese ride-hailing giant, announced on Friday that the company was starting procedures to delist from the New York Stock Exchange after the SEC's move.

Shares of Chinese firms listed in the US tumbled on Friday, with 80 percent of the firms recording losses and sending the NASDAQ Golden Dragon China Index down 9.12 percent.

The CSRC said recent communications with the US SEC and the Public Company Accounting Oversight Board (PCAOB) to address issues in bilateral cooperation have been "candid and constructive" and led to positive progress on several important issues.

Nonetheless, the CSRC noted that there had been a trend in recent years by certain political factions in the US to turn capital market regulations into political tools, wage unwarranted clampdowns on Chinese companies and coerce them into delisting from US stock exchanges. 

The CSRC slammed such a trend as a lose-lose mentality that goes against the fundamental principles and rule of law of the market economy, harms the interests of global investors, undermines the international status of US capital markets, and benefits nobody. 

The US has kicked several Chinese companies off its stock markets citing "national security."

Analysts also believed that the SEC's latest move on Thursday clearly targets Chinese companies, and it could lead to more than 200 companies being kicked off US exchanges.

The CSRC said regulators on both sides will certainly be able to find a mutually acceptable path of cooperation, as long as the two sides continue to conduct dialogue and hold negotiations in the spirit of mutual respect and trust, and deal with regulatory issues in a rational, pragmatic and professional way.

Forcing Chinese companies to delist from US stock exchanges is by no means a responsible policy option, it warned.

The CSRC also said the Chinese government's recent moves to regulate the development of the platform economy are aimed at limiting monopolies, protecting small businesses, safeguarding data and personal information security, and preventing the disorderly expansion of capital. 

It noted that these efforts do not target specific industries or private companies, nor are they necessarily connected to the overseas listings of Chinese companies.