Chinese enterprise D-share offering and listing practice (2)

A Chinese company that wishes to offer D-shares needs to secure the prior approval of the China Securities Regulatory Commission (CSRC) and comply with China’s Company Law, Securities Law and related laws and regulations. Additionally, to offer D-shares in Germany, the issuer is also required to pass review by the Federal Financial Supervisory Authority (BaFin) and the stock exchange.

Review system

The responsibility for regulating the offering and listing of stock in Germany is exercised by BaFin and the stock exchange, with BaFin being responsible for review of the prospectus and the stock exchange for review of the listing conditions. Nevertheless, the division of the review work between BaFin and the stock exchange is clearly demarcated, without duplicated review of any legal document.

The core of a review of a stock offering in Germany is information disclosure, and the stock exchange’s review of listing is also pro forma, without making any substantive judgment of the issuer. BaFin conducts a completeness review of the prospectus, which does not include review of accuracy. If the prospectus satisfies the requirements of completeness, consistency and understandability, it will be approved. Neither BaFin nor the stock exchange conducts a review of issues relating to the company’s substantive operations, such as its financial position, operating risks, business model, etc., which are assessed by intermediary institutions, including the investment bank, lawyers and auditors, whose determination will then be made thereon and be fully disclosed in the prospectus.

Frank Qu is a senior partner at Dentons

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