The Shanghai and Shenzhen stock exchanges have provided details for the trading of China depositary receipts (CDRs) ahead of a list of promised mainland IPOs by Chinese tech firms.
As Caixin reports, companies must issue a minimum 100 million CDRs during the listing, or an amount equal to RMB 5 billion ($777.3 million). Firms must also be free of any major law violations or fraudulent financial reports within the last three years.
Also stipulated were limits on dual-class stockholding structures, whereby different ‘classes’ of stock confers different voting rights. Special “Class B” shares are capped at twenty times the voting rights of ordinary “Class A” shares, according to the latest rules. The dual-class system is a method used by many tech and family-run companies in order to keep decision-making privileges after going public.
This multiple, which is higher than the voting rights ratios found at many Chinese tech firms, is not subject to change after the listing and class A shares must make up at least 10% of all voting stock.