China on Wednesday denied reports from financial agency Bloomberg saying it plans to ban its companies from listing on Wall Street by ending a legal loophole through which its tech giants have raised billions of dollars.
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Bloomberg, citing sources familiar with the matter, had said that Beijing would be preparing to ban its companies from using the mirror company structure (VIE), via a new version of the rules on foreign listing, likely to be finalized before the end of 2021.
But the Chinese Securities and Exchange Commission denied.
“We have noticed the articles … This news is not true,” she said in a statement on her website.
Beijing already prohibiting its private groups from being held by foreign capital, some have circumvented the difficulty in recent years by creating mirror companies called VIE, for “variable interest entity” in English.
These VIEs allowed them to break into Wall Street with a bang, like Alibaba, which broke all records in 2014 by raising $ 25 billion in New York City.
But Beijing has been downsizing its tech giants a year ago, blocking another giant IPO at the end of 2020 that Alibaba was planning to organize in Hong Kong and Shanghai for the benefit of its online payments subsidiary, Ant Group.
In a context of exacerbated economic nationalism, the communist regime encouraged its companies to list themselves on the national market. China has just opened a new stock exchange in Beijing, intended for SMEs, particularly those active in new technologies.
Beijing also fears that crucial data accumulated by its technological giants will go abroad.
Bloomberg had already said last week that the Chinese authorities had asked Didi, the equivalent of Uber in China, to withdraw from Wall Street where it has been listed since this summer and has raised 4.4 billion dollars (3.7 Billions of Euro’s).
Didi, who dominates in his country the market for the reservation of cars with driver (VTC), found himself in the wake of an investigation in connection with his collection of private data.
Authorities have since launched investigations into Didi’s cybersecurity, ordered his removal from app stores, and extended the investigations to other Chinese companies listed in the United States.
The Bloomberg article claimed the change should be included in the draft foreign listing rules that could be finalized as early as this month.
The financial agency clarified, however, that companies using VIEs could still benefit from IPOs (IPOs) in Hong Kong as long as they satisfied the regulators and the rules were still in the draft stage and could be changed. .
In the past year, China has embarked on a sweeping regulatory crackdown that has wiped out IPOs and hit large corporations as the government seeks to curb their influence.