2 hours ago
1
Beijing is restricting certain Chinese companies incorporated overseas from seeking initial public offerings in Hong Kong, requesting them to change their domicile back to China before going public, according to China's securities regulator.
The China Securities Regulatory Commission (CSRC) said on Tuesday (Mar 17) some red-chip firms, companies that are registered abroad, but hold assets and businesses in China via equity ownership, received the guidance to unwind the structure recently.
"Regulators at home and abroad have long scrutinised red-chip vehicles given their opaque shareholding structures and relatively high compliance risks," the CSRC said in a statement responding to Reuters queries.
Sources with knowledge of the matter told Reuters earlier on Tuesday that the CSRC had requested a number of IPO candidates in recent days that they should not list in Hong Kong unless they overhaul their corporate structure.
It was not immediately clear how many IPO candidates have received such guidance.
The CSRC said it has since December allowed five red-chip companies to complete their filings in order to list offshore.
FOCUS ON RED CHIPS FORMED SINCE NEW RULES
The securities regulator has since March 2023 implemented a new filing regime under which companies which adopted complex holding structures such as red chips are subject to Beijing's approval to raise funds offshore.
"Under the new regime, authorities typically examine the necessity and compliance of establishing red-chip structures, particularly whether such structures were built after the measures took effect," the CSRC said in the statement, referring to the new offshore listing rules.
Currently, more than 530 companies have filed applications for a Hong Kong listing, according to the exchange's website.
The CSRC, which said the guidance to unwind red-chip structures was a standard regulatory move, added it had consistently supported enterprises in lawfully listing in Hong Kong and other offshore markets.
The Hong Kong stock exchange declined to comment.
Bloomberg News first reported on Tuesday the restrictions, citing people familiar with the matter. The tightening measures contrast with Hong Kong's latest proposal to lower market value thresholds for companies seeking to use a dual-class share structure, among other new measures to boost its competitiveness.
Hong Kong was the top global IPO market last year. Chinese companies accounted for 77 per cent of its total market capitalisation at the end of 2025, exchange data shows.
