Chinese Enterprises Are Listed In The Us To Experience "Cold Current" &Nbsp; Enterprises Need To Adapt To The New Regulations.

Overseas companies backdoor in the US

New regulations put forward a number of prerequisites.

Reverse takeover refers to the merger or acquisition of a listed company (shell company) that a listed company intends to acquire from the United States.

According to the new regulation of the Nasdaq stock market, the New York stock exchange and the American stock exchange, the attempt to reverse the takeover of the three listed companies must meet several conditions, including: first, the backdoor businesses need to trade in the OTC market or other regulated us or foreign stock exchanges for one year.

Two, detailed documents on backdoor related information must be submitted so that the US financial supervisory authority and other regulators can review their trading patterns and disclose the timing of potential manipulation pactions.

Three, audited financial statements must be submitted for at least one fiscal year.

Four, in the 60 trading days before the application of the listing and the approval of the listing of the exchange, at least 30 trading days, the stock price shall not be less than 4 US dollars.

Five, if the backdoor business is traded on a foreign exchange, then the foreign exchange must be a regular exchange.

Reverse takeovers can allow listed companies to circumvent the regulatory scrutiny required for initial public offerings (IPO). Some companies that do not have listed qualifications take the opportunity to fish in troubled waters, and have successfully landed in the capital market through financial fraud and false data, which has hurt many investors' interests.

Insiders said that the new regulations could play a positive role in protecting investors' rights and interests.

Some Chinese enterprises are not motivated.

In the main markets of the United States, such as the NYSE, the national stock exchange or the NASDAQ Exchange, companies spend a lot of time and money on the IPO listing. The shortest time taken by backdoor listing is only 5 to 6 months, which costs less than $1 million. Therefore, many Chinese small and medium sized enterprises choose the latter way in the US.

Li Weidong, principal investigator of investment group of equity investment research group, said that the proportion of Chinese enterprises listed in the us through reverse takeover is very high, and other enterprises in emerging countries such as India and Brazil.

"The new regulations are largely aimed at Chinese enterprises," Dong Dengxin, director of the financial and Securities Research Institute of Wuhan University of Science and Technology, said in an interview with our reporter that some Chinese companies are not motivated to go public. Their main purpose is to collect money, which will lead to problems such as reports, information fraud, excessive packaging and so on.

In Europe and the United States, integrity is the necessary moral bottom line. After listing, there are not only strict supervision of institutions such as SEC, exchanges, auditing firms, law firms, but also strong private regulation, such as class action.

As a result, many Chinese companies are not convinced after listing in the US.

A joint study from the Law School of Stanford University and the cornerstone study of legal advisory bodies showed that only 25 companies in China suffered class action in the first half of 2011.

In the class action against Chinese enterprises, most of them follow a similar pattern, which involves accounting fraud and inadequate information disclosure.

Chinese companies, of course, have problems, and experts point out that American intermediaries who help them are also to blame.

Dong Deng said that some of the bad investment behavior of the United States swindled Chinese enterprises' money and would tell stories to Chinese companies to attract them to go public in the US.

Enterprises should rationally handle overseas listing

One year's "maturity" and the stability of stock prices in a period of time obviously increased the cost and difficulty of the planned Chinese companies listed in the US.

Experts point out that Chinese enterprises must take precautions against this problem.

Zhang Lan, an analyst at the Qing Research Center, said that domestic entrepreneurs should take into consideration the characteristics of the enterprises themselves and industries and carefully consider the necessity of going to the US for IPO or reverse takeovers.

After all, whether a good company is listed is not the only yardstick.

Listing, especially through reverse takeover, is a double-edged sword. It brings more capital and more pressure and uncertainty on the future development of enterprises. It also needs to disclose information regularly. Moreover, the cost of auditing and exchange maintenance costs is also a great deal.

Some experts believe that in the long run, the exposure of Chinese enterprises to the US market is not necessarily a bad thing.

Dong Dengxin said that Chinese enterprises can be baptized overseas and have a broader international perspective. It is also worthwhile to take risks.

The new regulations issued by the United States will have an impact on Chinese enterprises, but will not hinder the pace of Chinese enterprises going overseas.

In the future, Chinese enterprises should treat overseas listing rationally, and can not be listed for listing.

On the international stage, listing means more confidence and stronger. Chinese enterprises should have sufficient understanding of listing and be prepared for risks and costs.

We should bring the excellent quality, basic integrity and law-abiding consciousness of national enterprises overseas.