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...