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China IPOs Must Explain Offshore Structures to SEC

Applicants may now face 20 additional questions, and it remains unclear whether regulators will ultimately sign off on new offerings from Chinese firms.

By Bloomberg News | August 18, 2021 at 12:38 PM

Chinese companies applying to go public in the United States are facing increasingly detailed questions from the Securities and Exchange Commission (SEC) about their offshore corporate structures, according to people familiar with the matter.

Many of the SEC’s queries have focused on the nature and direction of cash flows through so-called variable interest entities (VIEs), which allow Chinese companies to circumvent Beijing’s restrictions on foreign ownership, the people said, asking not to be identified because the discussions are private.

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