After China’s crackdown on tech companies, America responds with this decision

The Securities and Exchange Commission (SEC) will request additional information from Chinese companies seeking to go public on US exchanges, following Beijing’s intensified crackdown on foreign stock offers, according to a statement on Friday.

SEC Chairman Gary Gensler said, “In In light of recent developments in China and general risks to established companies in China, under the structure [كيانات المصالح المتغيرة] It required employees to request certain disclosures from third party issuers associated with based operators in China before disclosing their registration data “.

He is familiar with allegedly changing interest entities of a facility used by large Chinese companies such as Alibaba and JD.com to go public in the US evading Beijing’s censorship as the state does not allow direct foreign ownership in most cases. These entities with changing interests allow companies to operate in China to set up offshore shell companies in another jurisdiction and issue shares to public shareholders.

Gensler said he was concerned that “regular investors may not be aware that they own shares in a shell company rather than a headquartered operator. in China”.

The SEC will require Chinese companies to clearly distinguish between shell company management services and an operating company, citing any risks stemming from shares future of the Chinese government.

The move came as Beijing tightened its control over the flow of Chinese companies’ quotes on international stock exchanges, the latest of which was the Didi app, which became the latest victim of the crackdown. The stock fell nearly 30% this month after Beijing announced a cybersecurity investigation and suspended registrations of new users.

The tensions between the two countries could be a serious blow to Chinese companies, which in recent years have asked for a listing in New York. Data from Renaissance Capital showed that in 2020, 30 Chinese IPOs in the US raised the largest capital since 2014.

According to the US-China Economic and Security Review Commission, there were at least 248 listed Chinese companies in 3 major US exchanges with a total market capitalization of $ 2.1 trillion. There are 8 Chinese state-owned companies listed in the United States.

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