The LEHMAN, Lee & Xu
China Law Newsletter keeps you up to date on recent developments in China Law and Legal Practice
China to Allow Foreign Companies to Issue Shares
The People’s Bank of China recently released its 2015 annual report on the Chinese economy and the bank’s economic management plans. Notable in the report is the promise to allow foreign companies to issue shares within the People’s Republic of China.
A major driver behind the move is believed to be the PBOC’s desire to offer diversified investment choices to mainland investors. The move is expected to further the PBOC’s goal of increasing convertibility of the RMB.
The bank did not specify a time-frame, but said that such changes would be forthcoming. The bank envisions offering foreign companies the opportunity to issue shares in the PRC, including what would be known as Chinese Depository Receipts, or CDRs.
CDRs would be issued by Chinese banks and represent the confluence of foreign equity registered and traded on Chinese exchanges. These CDRs will be similar to American depository receipts which have been widely used by Chinese and other foreign companies to issue shares in USA stock exchanges.
Lehman, Lee & Xu is monitoring these developments and regulations issued by the PBOC which would govern issuance of such CDRs.
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