China’s Securities Regulatory Commission has published guidelines for the issuing of China depositary receipts (CDRs) a month after the pilot program was announced in a draft proposal, bringing overseas-listed companies one step closer to trading shares on China’s domestic market.
The scheme, which takes immediate effect, seeks to emulate American Depositary Receipts for foreign equities, allowing foreign-listed companies to transfer shares to banks and so sidestepping red-tape associated with making IPOs in the country.
As Caixin Global notes, for Chinese tech companies, a key target of the CDR program, such restrictions include profitability requirements or limits on weighted voting rights.
The guidelines did not stipulate a minimum capitalisation for firms participating in the program, as had been suggested in last month’s draft proposal, but did delineate some financial prerequisites such as “no false accounting records and violations in the past three years”, and “continuous profitability and good financial condition.”