Thirtieth Keynote Speech of the "Fudan TNCs and Law Forum": The Risk of Cross-border Listing and Regulatory Reform of Offshore-listed Chinese Stocks: A Case Study of DiDi

Updated: 01,07,2022

On December 30, 2021, the thirtieth keynote speech of the "Fudan Transnational Corporations and Law Forum" and the fourth episode of this Forum's special series of "TNCs and Financial Law" was held successfully online. The speech entitled "The Risk of Cross-border Listing and Regulatory Reform of Offshore-listed Chinese Stocks: A Case Study of DiDi" was delivered by Professor LENG Jing of International Financial Law School, East China University of Political Science and Law, commented by Professor LIU Yan of Peking University Law School and Associate Professor HONG Yanrong of Peking University Law School, and hosted by Professor CAI Congyan of Fudan University Law School.

Professor LENG used DiDi's listing in the United States stock market as an example to illustrate the difficulties and challenges that Chinese corporations have encountered in the process of offshore listing, with special attention paid to the network security review. She considered that these difficulties and challenges arose not only from the differences in the rules of the market and law between China and the United States but also from the differences in the social governance model and political logic of these two countries, especially the misguided policies adopted by the U.S. in recent years in wantonly cracking down on Chinese companies to thwart their development. Professor LENG proceeded to explain in detail the updated domestic and foreign regulatory policies on the offshore listing of Chinese stocks and possible legal, market and political risks that they may confront therein. Moreover, from the perspectives of the domestic regulation of Chinese enterprises' overseas listing and the dual compliance of both Chinese and U.S. laws and regulations, Professor LENG further emphasized that domestic corporations should comply with the Chinese laws and regulations on data security while seeking to take advantage of the international capital market.

In the commenting session, Professor HONG analyzed the regulations and policies of Chinese enterprises' overseas listing from multiple perspectives. From the perspective of the financial market, she pointed out that the case of DiDi reflected the competition among the U.S., Hong Kong Special Administrative Region and Mainland China in both law and market attractiveness. The regulator would have to balance between promoting financing and protecting investors in determining the regulatory objectives in light of the multiple coexisting sets of capital market rules, including Dual Class Shares Structure, SPAC and the full implementation of security registration system domestically. Professor HONG suggested that building an open financial market should be a strategic priority of the national government.

Professor LIU discussed with Professor LENG on the legalization of the VIE structure. She pointed out the uncertainty in determining the legality of a VIE structure and, therefore, the potential risks that investors face, due to the inadequate cooperation and coordination between the responsible regulatory authorities involved in the supervision of the VIE structure. Meanwhile, she underlined that, in addition to the factors of capital market supervision, offshore listed Chinese corporations need to pay sufficient attention to the differences in the economic and political logic of China and the U.S.

On January 7, 2022, the Forum will host the thirty-first keynote speech entitled "Thoughts on Cross-border Law enforcement and Data Acquisition in the Extraterritorial Application of Financial Law" by Professor GUO Huachun of International Law School, East China University of Political Science and Law.


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