Beijing To Allow Foreign Funded Firms To List In China

by Philip Morton, Investors Offshore.com

12 November 2001

It was announced last week that the authorities in Beijing have agreed to allow foreign funded firms to sell shares to domestic investors on the Chinese mainland.

This move follows Beijing's endorsement of such firms' domestic listings in July of this year, and comes as the country readies itself for entry to the World Trade Organisation (WTO).

Guidelines for such offerings were jointly issued last week by the Ministry of Foreign Trade and Economic Co-operation (MOFTEC) and the China Securities Regulatory Commission. They lay out the legal basis for foreign funded joint stock companies which have been in operation for more than 3 years to seek a listing on either the domestic A-share, or foreign currency denominated B-share markets.

MOFTEC announced that once listed, foreign-domestic joint ventures must ensure that foreign investment remains at 10%, although officials have hinted that companies may lose their foreign investment tax privileges if holdings are diluted to below 25%.

The new rules have been condemned by some experts as too ambiguous over the issue of withdrawing capital from the country, but many feel that this is a deliberate move- although China has become increasingly open to foreign investment over the past few years, extraction of funds remains a difficult issue.

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