Gary Geissler, chairman of the Securities and Exchange Commission (SEC), issued a statement on Friday local time: as China has recently strengthened the supervision of US-listed companies, Chinese companies listed in the US in the future must further strengthen their information disclosure and disclose the relevant risks.

The statement described the risks of Chinese companies listing through variable interest entities (VIE) institutions, noting that under this arrangement, a Chinese operating company would usually set up an offshore shell company in another jurisdiction such as the Cayman Islands, which would sign service and other contracts with China-based operators and then issue shares on stock exchanges such as the New York Stock Exchange. Although the shell company has no equity in the Chinese operating company, the shell company can merge the operating company into its financial statements for accounting purposes.

Geissler believes that for US investors, although shell companies are associated with domestic companies through a series of service contracts and other contracts, whether they are investors in shell stocks or offshore shell companies themselves, there is no stake in the Chinese operating company.

Geissler claims to be concerned that ordinary investors may not realize that they are holding shares in a shell company, not in a Chinese operating company.

Given the overall risk of the VIE structure, Geissler asked staff to increase disclosure before the registration statement of foreign issuers associated with Chinese operating companies takes effect. In particular, to ensure that the issuer clearly disclosed in the prospectus:

1. Investors buy not the shares of a Chinese operating company, but the shares of a shell company issuer who maintains a service agreement with the relevant operating company.

2. Detailed financial information, including quantitative indicators, so that investors can understand the financial relationship between Chinese operating companies and issuers.

In addition, for all Chinese operating companies that seek to register securities with the Securities and Exchange Commission directly or through shell companies, Geissler requires staff to ensure that these issuers clearly disclose in a prominent position:

1. Whether the operating company and issuer have obtained or been approved by the relevant Chinese authorities for listing in the United States.

2. Under the Foreign Company Accountability Act, the Public Company Accounting Oversight Board (PCAOB) has the right to inspect the financial statements of companies listed in the United States within three years. If PCAOB fails to do this, the company could face delisting.

Finally, Geissler asked employees to conduct additional targeted reviews of applications from companies with significant business in China.

Yi Hui Man: the premise for an enterprise to list abroad is to comply with relevant domestic laws and regulations and regulatory requirements.

In fact, regulators have recently sent a lot of signals to address the problem of overseas listings of companies.

Yi Huiman, chairman of the CSRC, said at the Lujiazui Forum recently: choosing a suitable place for listing is an independent choice made by enterprises according to their own development needs. Some enterprises are willing to list overseas, and some enterprises listed abroad are willing to return. It is a normal phenomenon that some companies come and go, and we are generally supportive.

Yi Huiman also stressed that no matter where the market is listed, enterprises should abide by local laws and regulations, build up the awareness of public companies, fear the rule of law, and fear investors. Regulators around the world also need to further strengthen law enforcement cooperation with each other, jointly provide good regulatory expectations and environment for the market, and jointly combat violations of laws and regulations. At the same time, we will earnestly handle the relationship between openness and security, and the premise for enterprises to list abroad is to comply with relevant domestic laws and regulations and regulatory requirements.

Xinhua News Agency: industry Supervision Policy is conducive to China's long-term Development

Xinhua News Agency published an article entitled "observation of Hot spots in China's Stock Market" on July 28, which pointed out that as some recent regulatory policies involve overseas listed companies, there is a concern in the market about whether there are uncertainties in the policy of Chinese enterprises listing abroad in the future and whether the pace of opening up of China's capital market to the outside world has slowed down.

There are some misgivings in the market for the recent regulatory policies on the platform economy, education and training and other industries. This sentiment has been reacted to in the stock market.

To correctly understand the regulatory policies of platform economy, education and training and other industries, we must proceed from the overall situation of China's economic and social development.

The Fifth Plenary session of the 19th CPC Central Committee, the Central Economic work Conference, and the Ninth meeting of the Central Financial and Economic Committee clearly put forward the need to strengthen anti-monopoly, prevent disorderly expansion of capital, and effectively guard against risks. From the strategic perspective of building new national competitive advantages, we should establish and improve the platform economic governance system, and promote the healthy and sustainable development of the platform economy. This points out the direction for strengthening the supervision of platform enterprises and promoting the high-quality development of platform economy.

Since last year, strengthening regulation and supervision has become the key word for the economic development of the platform. The upgrading of a series of regulatory policies and the penalties of anti-monopoly cases all send a clear signal to the market: the inappropriate regulatory system is being improved at an accelerated pace, and the development of the platform economy should move towards a benign and orderly track.

Recently, the Office of the CPC Central Committee and the Office of the State Council issued the opinions on further reducing the burden of homework and out-of-school training of students in compulsory education. It is suggested that "discipline training institutions shall not be listed for financing, and capitalization operation shall be strictly prohibited" and other relevant regulatory policies.

It should be noted that in recent years, a large amount of capital has poured into the training industry, selling anxiety and excessive propaganda have alienated the nature of education and destroyed the public welfare and normal ecology of education. The introduction of this policy is a correction for the pain points of the people's livelihood.

From this, it is not difficult to draw a conclusion: whether aimed at the platform economy or off-campus training institutions, these regulatory policies are important measures to promote the standardized and healthy development of the industry, maintain the security of network data, and ensure the livelihood of the people. It is not aimed at restrictions and crackdowns on related industries, but is conducive to long-term economic and social development.