Regulation of private placements by issuers

The media recently reported that the China Securities Regulatory Commission (CSRC) had halted listed companies’ cross-industry private placements among the online finance, gaming, film and television, and virtual reality sectors. Reports said the CSRC had also suspended mergers and acquisitions (M&A), and refinancing in those industries. The authors will analyze the latest regulatory policies of the CSRC on private placements by listed companies, as well as future trends.

Chinese business news site Caixin reported the CSRC’s above-mentioned measures on 11 May. The report caused a disturbance in the above industries, but the CSRC denied the report a couple of days later. At a public ceremony in Chongqing, Zhao Lixin, the inspector and deputy director of the CSRC’s Department of Listed Company Supervision, said the commission would strictly punish false disclosures and other illegal activities.

We can conclude from recent statements of the CSRC that the regulator has not banned all cross-industry private placements. They will be examined on a case-by-case basis, and the audit speed will be strictly controlled for the purpose of strengthening supervision.

Jiang Fengtao is the managing partner and Liu Bin is a partner with Hengdu Law Offices