Hurdles yet to listings by foreign companies

The mainland welcomed foreign companies to the A-share market through direct listing or by Chinese depositary receipts, but the regulators still needed some time to clear the legal and regulatory hurdles, a senior mainland securities official said.

Yao Gang, a vice-chairman of the China Securities Regulatory Commission, was quoted by Xinhua as saying in London on Monday that legal and technical barriers remained before Beijing could allow foreign companies to list in Shanghai, part of the efforts to transform the country's commercial hub into a global financial centre.

'Foreign companies should comply with the existing laws and legal procedures before they come to list shares in China,' he was quoted as saying, adding that they could choose to either sell initial public offering shares or issue CDRs.

A CDR is a certificate issued by a Chinese bank that represents a pool of foreign equity that is traded on local exchanges. Foreign companies can use CDRs to allow Chinese investors to own their stock.

'A foreign company can't directly float A shares unless it is in compliance with the securities and corporate laws,' said Mr Yao. 'A CDR will be a new securitised product in China, and some technical problems should be ironed out by banks.'

Under existing laws, only mainland-registered firms can list shares on the domestic exchanges.

Sources close to the CSRC said it would take a long time before a foreign company could land a listing on the Shanghai bourse, because the issue was not on the top of the regulator's agenda.