By Tang Guhan
The Chinese Securities Regulatory Commission (CSRC) released its files regarding answers to domestic investors' questions and doubts about the upcoming first batch of Chinese Depositary Receipt (CDR) companies on Wednesday night.
The paper elaborated the aims of the Chinese government to support overseas high-tech companies' CDR issuances and IPOs at home. It said that the Chinese government encouraged the innovative Chinese companies who are listed overseas to go public in China to better serve the real domestic economy.
The issuance of shares of these companies at home will shore up the internationalization of domestic markets and improve the quality of domestically listed companies. Also, local investors could share the bonuses from economic developments.
With the development of the Chinese capital markets, the Chinese authorities are well prepared for the new CDR regulations.
The paper also traced the origins of Depositary Receipts (DRs) in America as well as the types of DRs.
It stressed the difference between the DRs and the stocks for investors.
Meanwhile, it defined how the brokerage houses and their custodians function during the entire process.
A brand new consulting committee under the CSRC will be created in accordance with the future CDR issuances in the domestic market. The Committee will assess the qualifications for the innovative companies who want to go public domestically through the CDRs and IPOs firstly before handing them over to the CSRC. Also, it will provide professional advice to these companies and the related assessment authorities.
Regarding how to protect investors from potential risks, the paper vowed to make sure the CDRs companies will carry out the same policies for investors 'rights at home and abroad.
Furthermore, investors could safeguard their legal rights through civil actions at local courts.
