SEC to seek extra disclosures from China-based companies
The United States Securities and Exchange Commission (SEC) said on Friday it is imposing new rules for Chinese companies in response to Beijing's restrictions on China-based companies raising capital offshore.
SEC Chair Gary Gensler (pictured) noted that Beijing's measures are forcing Chinese companies to establish offshore shell firms in other jurisdictions to issue stock to publish shareholders and stressed the SEC will ask these offshore companies to provide "certain disclosures" before their registration statements will be declared effective.
Specifically, the companies should disclose that investors are buying shares of the shell company rather than the China-based firm, that the China-based operating company, shell company and investors "face uncertainty about future actions by the government of China." The SEC will also ask for detailed financial information "so that investors can understand the financial relationship between the VIE [Variable Interest Entities] and the issuer."