China is planning to introduce new regulations that would ban several Chinese companies that handle sensitive user data from listing abroad, the Wall Street Journal reported on Friday, in a move that could be a severe blow to the ambitions of local internet companies who are planning to launch foreign initial public offerings (IPOs).
KEY FACTS
- According to the WSJ report, the China Securities Regulatory Commission (CSRC) has informed some companies and their foreign investors that local internet giants who hold a large amount of user data will be prohibited from listing abroad.
- As part of the rule change, the Chinese regulator will set up a mechanism that will require companies to obtain formal approval before moving ahead with a foreign IPO.
- The approval process will be handled by a cross-ministry committee that will be set up in the coming months.