SEC Requires New Disclosures on Chinese IPOs

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The Securities and Exchange Commission is throwing ice water on Chinese companies hoping to go public.

On Friday, the SEC said that it would start to require additional disclosures from Chinese companies that are seeking to list on a U.S. exchange. 

“wIn light of the recent developments in China and the overall risks with the China-based VIE structure, I have asked staff to seek certain disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective," SEC Chairman Gary Gensler wrote in a statement.

One such disclosure, Gensler says, will require "the China-based operating company, the shell company issuer, and investors face uncertainty about future actions by the government of China that could significantly affect the operating company’s financial performance and the enforceability of the contractual arrangements..."

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