China’s securities regulator has allowed Chinese mainland companies listed in Hong Kong to convert their unlisted holdings into shares that can be freely bought and sold on the city’s stock exchange, reported Caixin.
The change — which only applies to companies incorporated on the mainland and listed in Hong Kong, but not on the mainland — allows for the bulk of such shares to be traded in the city for the first time, boosting their liquidity in the market, making it easier for mainland companies’ shareholders to raise funds, and perhaps improving their corporate governance.
Inguidelines released Friday, the China Securities Regulatory Commission (CSRC) signed off on the full convertibility of unlisted shares of these Hong Kong-listed mainland companies, including those held by domestic and overseas shareholders. Companies will still need to apply to convert these shares.
As of July, 161 of 163 mainland-incorporated companies listed in Hong Kong but not on the mainland have not converted their unlisted equity, Ba Shusong, chief China economist of Hong Kong Exchanges and Clearing Ltd., and Bai Haifeng, CEO of China Merchants Asset Management (Hong Kong) Co. Ltd., said in an article.