This post will be a quick comment on some new developments in China, an analysis will follow later in the week.
The CSRC has come up with some basic rules for RTOs in China, and reverse listings. The rules are still out for comment by industry professionals and we’re likely to see some minor changes in them still, but the overall road they wish to take is clear: RTOs and reverse listings will be subject to a similar legal framework as regular listings. This means demands on profitability and stable balance sheets.
What this will mean in reality is that listing overseas will become even more attractive to Chinese companies. Although it also provides an opportunity for the SEC to have a long talk with the CSRC about regulations on reverse listings in the US.