With the deepening of my country's economic opening to the outside world, there are some very important large-scale companies in our country. When our country's listing conditions are relatively harsh, some companies often choose to list abroad. Overseas listing has a more relaxed domestic environment. , What is the procedure for overseas listing of domestic assets?

 

1. The main methods of overseas listing of domestic enterprises

 

   1. Overseas direct listing of domestic enterprises

Overseas direct listing means directly applying to the foreign securities authorities to issue stocks (or other derivative financial instruments) in the name of the domestic company, and applying to the local stock exchange for listing and trading. That is, what we usually call h-shares, n-shares, s-shares, etc. (h-shares refer to the issuance and listing of stocks by Chinese companies on the Hong Kong Stock Exchange, taking the first word "h" of hong kong as their name; n-shares refer to Chinese companies issue and list shares on the New York Stock Exchange, taking the first word "n" of newyork as their name; the same s-share means that Chinese companies are listed on the Singapore Exchange). Usually, overseas direct listings are carried out in the form of IPOs.

 

The main difficulty of overseas direct listing is that the laws at home and abroad are different, and the requirements for company management, stock issuance and trading are also different.

 

2. Overseas indirect listing of domestic enterprises, that is, "backdoor listing" overseas through overseas companies involving domestic rights and interests.

 

"Backdoor listing" means that domestic companies do not directly issue stocks overseas for listing, but use the name of companies registered overseas to list overseas. Realization, so that domestic enterprises can achieve the purpose of overseas listing. There are two modes of backdoor listing, namely, buying a shell listing and creating a shell listing. Whether it is "buying a shell" or "building a shell", the essence is to achieve the purpose of listing domestic assets by injecting domestic assets into shell companies.

 

"Buying a shell to go public" means that a domestic company acquires part or all of the equity of an overseas listed company, and then injects assets into it to achieve the purpose of overseas indirect listing. Buying a shell listing can avoid the complicated approval procedures for overseas listings in domestic law, and the financial disclosure of enterprises is relatively loose, which saves time and achieves the purpose of actual listing. The disadvantage of buying a shell to go public is (1) the high cost of buying a shell (for example, in the Hong Kong market, due to the increase in the price of shell companies, the cost of acquisition is greatly increased), which goes against the original intention of most domestic companies to go public overseas; (2) risks bigger. Because of the unfamiliarity with overseas listed companies, once the acquisition is completed, the purpose of listing is not achieved (for example, if you buy junk stocks, you will not be able to raise funds from the market after taking control, but will be burdened with debt) or the acquisition will fail, the price will be very high.

 

2. What are the procedures for overseas listing of domestic assets?

The overseas listing process of Chinese enterprises

Make appropriate adjustments to the listing process according to factors such as the quality of the enterprise and different projects and operation modes. The right of interpretation and modification belongs to the company, and reserves the right to make relevant adjustments. The workflow is basically as follows:

 

The first stage of preliminary negotiation

(1) The main form of initial contact is that the representative of the investment holding group contacts and negotiates with the main person in charge of the enterprise to establish preliminary contact.

(2) The representative of the investment holding group understands the status of the enterprise. Focus on equity structure, industry and industry status, sales, net profit, net assets, amount of raised funds, investment direction of raised funds, expected performance in the next 2 or 1 year, and the company's own plans and assumptions.

(3) The representative of the investment holding group will make a simple judgment and make preliminary suggestions based on the preliminary information of the enterprise.

 

The second stage Signing the Letter of Intent on Entrusting Overseas Listing

After the representatives of the investment holding group and the company reached a consensus on overseas listing, the two parties signed the Letter of Intent on Entrusting Overseas Listing. The representative of the company will provide the company with the catalogue of the required information and documents, and adjust and revise the catalogue according to the different circumstances of the company. If the confidentiality of the information of both parties is involved, a "Confidentiality Agreement" must be signed.

 

The third stage is to submit the "Overseas Listing Recommendation Report"

After obtaining the detailed information of the company and conducting on-the-spot investigation, the representative of the company will conduct an internal preliminary review and prepare an "Overseas Listing Recommendation Report", which will be submitted to the US headquarters for review. After obtaining a clear intention from the US headquarters, the investment holding group issued a business letter to formally notify the Chinese company.

 

Stage 4 Due Diligence

The Investment Holding Group will send professionals to the company to conduct detailed on-the-spot investigations, mainly including comprehensive due diligence (law, administration, operation, production, management, etc.) and financial due diligence. Complete the full set of formal texts of the three tables and one book (balance sheet, profit and loss statement, cash flow statement and business plan).

 

The fifth stage Signing the entrusted listing contract

After completing all the domestic listing procedures, the investment holding group will arrange representatives to sign the "Entrusted Listing Contract" with the legal representative of the enterprise, and officially start the listing procedure.

 

The sixth stage of overseas financial review

The accounts are rationally sorted out and standardized by senior financial experts to make them compliant with US GAAP.

 

The seventh stage: overseas document production

According to the documents provided in China, translate and produce English business plans and other documents that conform to international norms, such as: three tables, financial structure, legal structure, business plan, stock exchange, merger documents, notarial certificates, etc. (all by done overseas). And assist enterprises to register offshore companies or register offshore companies by themselves.

 

The eighth stage of overseas declaration

Filed with the U.S. Securities and Exchange Commission (SEC). Including 8K, Form3, Form4, 13D, 10Q. And obtain the stock code and registration number.

 

The ninth stage of the first private equity financing (PIPE)

(1) Private placement preparations: carry out image building and financial research for listed companies, including VI design, feature film production, feature reports, press conferences, and roadshow arrangements.

 

(2) The investment holding group utilizes customer resource advantages and professional advantages to help companies conduct private equity financing before listing transactions to institutional investors, funds, and individual investors. In accordance with relevant Chinese laws and regulations, domestic private placement is limited to specific personnel within the enterprise, and the number is limited to less than 200.

 

The tenth stage post-listing work

(1) After the enterprise obtains the first batch of funds for enterprise development, the investment holding group will continue to maintain the stability of the stock price after the enterprise is listed.

(2) The investment holding group will promote the stock price, strive to allow the enterprise to raise more funds, and lay the foundation for the rapid development of the enterprise and the early successful rise of the board.

 

 

3. Main Channels of Mainland Enterprises

1. Overseas direct listing (IPO) of mainland enterprises: listing overseas in the form of H shares, N shares and S shares

Enterprise legal persons in mainland China can directly obtain listing qualifications overseas through the initial issuance of shares (H shares) in Hong Kong, or the initial issuance of shares (N shares) in New York, or the initial issuance of shares (S shares) in Singapore. Such as Tsingtao Brewery (H shares), Zhongxin Pharmaceutical (S shares), etc.

 

2. Overseas companies involving domestic rights and interests are directly listed overseas (IPO, red chip shares)

A method in which a legal person company or other equity related company outside mainland China directly or indirectly enjoys the equity rights or asset rights of a mainland Chinese enterprise and is directly listed outside China. For example, Yuxing Computer was listed in Hong Kong, and Dazhong Foods was listed in Hong Kong.

 

3. Overseas purchase of shell listing or reverse merger of corporate legal persons in mainland China or outside mainland China

For example, CITIC Pacific bought a shell listing in Hong Kong, and Zhejiang Jinyi bought a shell listing in Singapore. North America, especially the Canadian market, generally adopts reverse takeover (RTO) to achieve listing

 

4. Overseas spin-off and listing of domestic A-share listed companies

For example, A-share companies Tongrentang, Fudan Microelectronics, Qingdao Huanyu and other spin-off subsidiaries listed on the Hong Kong Growth Enterprise Market in the form of H shares.

 

5. Depository Receipts (DR) and Convertible Bonds (CB)

Eight companies, such as Tsingtao Brewery and Shanghai Petrochemical Yizheng Chemical Fiber, are listed in Hong Kong. They are also listed on the Global Deposit Receipt (GDR) and American Depositary Receipt (ADR) in all parts of the world and the New York Stock Exchange in the United States.