Chinese counsel: meeting CDR requirements won’t be easy

Author: Karry Lai | Published: 11 Jul 2018

China is introducing depositary receipts (CDRs) in an attempt to lure back to its capital markets local technology companies which have chosen to list overseas.

Heavy capital controls and restrictions on investing in stock exchanges mean that Chinese businesses often opt to list on overseas exchanges such as Hong Kong or New York. CDRs will allow Chinese companies to tap into the domestic capital markets to fundraise. The programme is aimed at technology companies in sectors that are in line with China’s Made in China 2025 strategy, such as biotechnology and internet companies.

While the CDR rules have been highly anticipated, this doesn’t mean many will be able to meet the requirements to issue them.

"Meeting the requirements to be a CDR issuer doesn't look easy," said Hugo Ngaw, group legal counsel at Convoy. "According to rules issued by the China Securities Regulatory Commission, companies listed abroad will need a market...