CHINA: An Introduction to Capital Markets: Debt & Equity (PRC Firms)

China: Capital Markets: Debt & Equity (PRC Firms)

The biggest reform of China’s capital market in 2023 was the full implementation of the stock issuance registration system. On 17 February 2023, a total of 165 sets of rules and regulations in connection with the full implementation of the stock issuance registration system were officially released and implemented, covering various aspects such as issuance conditions, registration procedures, sponsorship and underwriting, major asset reorganisation, supervision and enforcement, and investor protection. The full implementation of the registration system marks the basic finalisation of the institutional arrangements for the registration system, and marks the extension of the registration system to the entire market and all types of public offering of stocks. In April 2023, the first ten companies were listed in accordance with the rules and regulations under the new registration system on the main board of the Shanghai and Shenzhen Stock Exchange, representing the official launch and implementation of the system reform. On the same day of the release of the rules for domestic listings under the registration system, upon approval of the State Council, the China Securities Regulatory Commission (CSRC) released six sets of rules and regulations for the filing and administration of overseas securities offering and listing, including the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies accompanied by five supporting guidelines, which came into effect on 31 March 2023. The implementation of the above-mentioned policies has completely changed the legal environment of China’s stock market.

On 1 September 2023, CSRC formulated and released the Opinions on the High-Quality Building and Development of the Beijing Stock Exchange, containing 19 articles for deepening the reform of the NEEQ and forming the Beijing Stock Exchange (BSE) as the primary platform serving innovative small and medium-sized enterprises, which contributed to the activation of the BSE market. However, it is not without regret that due to various reasons such as the downturn of China’s stock market since the second half of 2023, the PRC regulatory authorities have substantially tightened the reviewing and listing procedures and requirements for applications of new stock issuance and refinancing by listed companies, leading to the legal service needs of the entire PRC stock market dropping to freezing point. At present, the BSE is outperforming the other PRC stock exchanges, resulting in a large number of companies which are preparing for domestic listing turning their attention to the BSE. Consequently, there has been a surge in the number of filings and applications to the BSE, and the relevant legal service market has also picked up.

 In terms of overseas listings of Chinese companies, the new policies which came into effect on 31 March 2023 stipulate that both direct listing and indirect listing (commonly known as “small red-chip”) shall fulfil the filing procedure with the CSRC. Although the new filing rules have increased the complexity level of listings through the small red-chip method to a certain extent, as the application reviewing progress of the CSRC has accelerated notably in the second half of 2023, the overall impact of the new filing requirements on the overseas offering and listing of Chinese companies was not particularly significant. However, affected by the instability and uncertainty of the international landscape and the downturn of the Hong Kong stock market, the number of PRC mainland companies successfully listed on the Hong Kong Exchanges and the fund-raising amount by such companies in Hong Kong have decreased materially, while the number of China Concepts Stocks listed on the United States stock exchanges surged to 35, which is considerably more than that in 2022. However, viewing from the perspective of the whole capital market, the overall amount of funds raised by PRC companies is relatively low, with few cases of large-scale and well-known companies. This has also brought considerable negative impact on the legal service market targeted at overseas offering and listing by domestic companies.

In terms of the debt market, on 16 March 2023, the Communist Party of China Central Committee and the State Council released The Plan on Reforming Party and State Institutions, which redesignated the duty of reviewing applications of corporate debt issuance previously undertaken by the National Development and Reform Commission to the CSRC, which shall be responsible for the unified deployment and review of corporate (enterprise) debt issuance. The reform was officially launched on 24 November 2023, and the first batch of five companies have obtained approval from the CSRC.

In late October 2023, the Central Financial Work Conference was held, with an emphasis on preventing and addressing financial risks: in particular, the bond repayment risk of local government investment platforms. In recent years, the frequent occurrence of bond repayment crises of regional large and medium-sized state-owned companies has attracted the attention of the market and regulatory authorities, and the PRC government has also strengthened the control on debt issuance by state-owned enterprises at a national level. In terms of overseas debt issuance by domestic companies, due to the widespread bond repayment crisis among Chinese real estate companies, overseas debt issuance by Chinese real estate companies has been hard-hit across the market, while the debt issuance by quality non-real estate companies is still being carried out smoothly. However, due to the interest rate hike approved by the US government which led to the relative depreciation of Chinese yuan against US dollar, domestic companies are facing greater pressure on bond repayment, and their willingness to issue USD bond has been decreasing.

Looking ahead to 2024, the newly promulgated Company Law is expected to provide market institutions with new regulatory rules and mechanisms. At the same time, we hope the US Federal Reserve will hit pause on interest rate hikes and even cut the interest rate of USD in order for the stock market to rebound, and, together with the anticipated de-escalation of international conflict and tension, Chinese companies may be embracing new opportunities for overseas offering and listing. Meanwhile, we are also looking forward to improved performance of China’s A-share market, leading to the normalisation of domestic listing of Chinese companies and the revitalisation of the legal service industry for China’s capital market.

中国：资本市场：债权和股权（中国律所） 

中国资本市场在过去的2023年最大的进展是全面注册制落地。2023年2月17日，全面实行股票发行注册制相关制度规则正式发布实施。此次发布的制度规则共165部，内容涵盖发行条件、注册程序、保荐承销、重大资产重组、监管执法、投资者保护等各个方面，注册制的制度安排基本定型，并推广到全市场和各类公开发行股票行为。4月，沪深交易所主板注册制下首批10家企业上市交易，标志着注册制改革全面落地。在境内上市全面注册制文件发布的同一天，经国务院批准，中国证监会发布境外上市备案管理相关制度规则，自2023年3月31日起实施。此次发布的制度规则共6项，包括《境内企业境外发行证券和上市管理试行办法》和5项配套指引。前述政策的落地实施，彻底改变了中国股票市场的法律环境。

2023年9月1日，证监会制定并发布《关于高质量建设北京证券交易所的意见》，推出“北交所深改19条”，激活了北交所市场。但不无遗憾的是，由于下半年以来中国股市表现低迷等一系列原因，监管层大幅度收紧了股票新股发行及上市公司再融资审核及上市进度，导致整个股票市场法律服务极速降至几乎冰点，目前只有北交所一枝独秀，大批准备在境内上市的公司转向北交所，导致北交所申报数量激增，相关法律服务随之升温。

在中国公司境外上市方面，于2023年3月31日起实施的新政，把直接上市和间接上市（“小红筹”）都纳入中国证监会备案范围。虽然备案新规一定程度上增加了小红筹上市的复杂性，但证监会审核进度在下半年明显加快，总体上对中国企业境外上市进度影响并不特别显著。但是受国际形势和香港股票市场影响，中国内地企业在香港上市数量和募集资金数量都大幅度减少，而中概股在美国上市数量远高于2022年，达到35个，但从市场整体来看，整体募资资金金额都比较小，鲜见大型知名企业的案例。这给中国境外上市法律服务市场也带来了较大冲击。

债券市场方面，2023年3月16日，中共中央、国务院印发《党和国家机构改革方案》，将发改委的企业债券发行审核职责划入证监会，由证监会统一负责公司（企业）债券发行审核工作。该项改革在2023年11月24日正式落地，首批五家企业获得批文。

2023年10月底召开的中央金融工作会议强调防范化解金融风险，其中地方城投平台的债券兑付风险首当其中。近几年频频出现的地方大中型国有企业债券兑付危机引起市场和监管层重视，国家层面也加强了对国有企业发债的管控。在中国企业境外发债方面，因为中国房地产企业普遍出现的债券兑付危机，导致中国企业境外发债在市场方面遇冷，但优质的非房地产企业发债仍然平稳进行，但是美元加息导致人民币相对美元贬值，也让企业偿债压力更加沉重，企业发美元债的意愿并不旺盛。

展望2024年，刚刚颁布的新《公司法》给市场主体以新的制度供给，同时，也期待美元逐渐走入停止加息甚至降息通道带来股票市场回暖，以及国际形势期盼中的缓和，给中国企业境外上市新的机遇。更期待中国A股市场能有新的表现，让中国企业境内上市回归常态化，重新焕发中国资本市场法律服务市场生机。