Heeding Beijing's call, law firms tone down China risks in IPO applications
HONG KONG (Reuters) -Law firms in China are scrambling to comply with Beijing's new guidance to tone down the language used to describe China-related business risks in companies' offshore listing documents, five people familiar with the matter said.
The moves come after China's securities regulator last month in a closed-door meeting asked domestic law firms to refrain from including negative descriptions of China's policies or its business and legal environment in the IPO prospectuses.
A failure to do so could mean their listings are not able to get a regulatory nod, the China Securities Regulatory Commission (CSRC) warned, Reuters had first reported, citing people with knowledge of the matter.
The law firms are now racing to change the wordings in some already submitted listing prospectuses and applications yet to be filed, said the five sources, who declined to be identified due to sensitivity of the matter.
Some potential issuers, which have yet to be given the green light from the CSRC, were earlier this month asked by the regulator to tweak the risk factors in their prospectuses to comply with the new offshore listing rules, said one of the sources.
China's new listing rules, which came into effect in March, stipulate that any «distortion or misinterpretation» on China's laws and policy, business environment, and judiciary was prohibited.
All major markets require listing aspirants to disclose to prospective investors risks related to the companies themselves, their business sectors, and the countries where they are headquartered in their offering prospectuses.
Beijing's demand for companies to tone down China business-related risks comes amid the country's stuttering economy, heightened geopolitical tensions and
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