Photo taken on June 17, 2019 shows the electronic screen displaying launch of the Shanghai-London Stock Connect scheme on the London Stock Exchange. (Xinhua/Han Yan).
BEIJING, May 18 (Xinhua) -- Chinese securities regulator released on May 16 a guidance document to regulate overseas issuance of global depository receipts (GDR) by listed companies at home, reported Xinhua-run China Securities Journal on Wednesday.
China Securities Regulatory Commission (CSRC) supported domestic listed companies with certain size of market capitalization and high level of standard operations to issue GDRs overseas to invest in their main business sectors that are in line with national industrial policies or satisfy their overseas business development demand.
According to the document, listed companies at home that issue for the first time GDRs overseas are required to conduct record filing with CSRC within three working days after their overseas submission of related GDR issuance and listing applications.
Before their application submission, their sponsors shall submit the newly added basic shares issuance registration applications to related stock exchanges in China. Bourses in China are required to provide review opinions by taking reference from the procedures for domestic listed companies to issue stocks to special investors and report to CSRC for registration.
In February 2022, rules for GDR business under the Stock Connect programs debuted in China. Since then, overseas GDR issuance by listed companies at home accelerated noticeably.
By May 16, a total of 14 listed companies in China issued GDRs and they altogether raised 5.037 billion U.S. dollars of funds. A rough calculation tells that there are nearly 40 companies which are working for GDR issuance at present.
Providing a new channel for China's listed companies to finance in overseas market, GDR issuance also offers a new window for overseas investors to participate in China’s capital market, market watchers say.
Compared with IPO in H-share market and private placement on A-share market, GDR issuance boasts unique advantages in pricing, review cycle, trading limitation, and issuance interval, reported the newspaper citing analysts with CITIC Securities.
Seen from the already issued GDRs or announced GDR issuance plans in 2022, industries that the related domestic listed companies are engaged in are changing from the past domestic market-oriented traditional industries to export-oriented manufacturing, according to CITIC Securities.
CSRC previously said that it would continue to promote mechanism optimization for GDR business under the Stock Connect program together with other regulators to further expand the overseas listing channels for domestic listed companies and improve cross-border securities investment facilitation. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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