China Seeks To Ban Overseas IPOs For Tech Firms With Security Risks

China is framing rules to ban internet companies whose data poses potential security risks from listing outside the country, including in the United States, according to a person familiar with the matter, Tony Munroe, Zhang Yan, and Bhargav Acharya reported for Reuters.

Photo Insert: The Shanghai Stock Exchange

The ban is also expected to be imposed on companies involved in ideology issues, said the person, declining to be identified as the matter is private.

Beijing said last month it planned to strengthen supervision of all firms listed offshore, a sweeping regulatory shift that came after a cybersecurity investigation into ride-hailing giant Didi Global Inc. just days after its US listing.

Under the planned rules, the Chinese securities regulator would tighten scrutiny of overseas IPO-bound firms and ban those that collect vast amounts of user data or create content that could pose possible security risks, said the person.

All internet firms would be asked to voluntarily apply for reviews with the powerful Cybersecurity Administration of China (CAC) if they aim to list their shares outside China, said the person.

CAC would conduct the review, if necessary, with other relevant ministries and regulators, the person said, adding after the cybersecurity watchdog's approval companies would be allowed to submit an application to the securities regulator.

The China Securities Regulatory Commission (CSRC) and CAC didn't immediately respond to Reuters' request for comment. The plan is one of several proposals under consideration by Chinese regulators as Beijing has tightened its grip on the country's internet platforms in recent months, including looking to sharpen scrutiny of overseas listings.

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