Chinese Depository Receipts (CDR) launch

Highlights of the SCMP article

  • Qualification to list a-shares

    The State Council said qualified innovative companies with valuations of no less than 20 billion yuan (US$3.2 billion) and annual revenue of at least 3 billion yuan could embark on the CDR system to either float additional shares, or launch initial public offerings on the A-share market.

  • Potential companies

    About 30 “unicorns” – unlisted companies valued at more than US$1 billion – and Chinese internet giants that are already traded on equity markets abroad will be eligible for issuing CDR shares.

    Last week, a joint study issued by a Ministry of Science and Technology affiliate and a Beijing-based consultancy published a list of China’s 164 unicorns, which are worth a combined US$628.4 billion.

  • VIEs - this kind of validates the VIE structure

    The proceeds that companies net from CDR issuances can be transferred abroad, but the companies must be registered with the China Securities Depository and Clearing Corporation, according to the guidelines.