Spotlight on CSRC’s Regulation on Overseas IPOs: CSRC Applies Foreign Investment Negative List Exemption to SF Holdings’ Hong Kong IPO

SF Express Holdings Limited (“SF Holdings”), one of the leading express delivery company in China, with its shares listed on the Main Board of the Shenzhen Stock Exchange in 2017, announced on June 3, 2024 that, it had received a Notice of Filing for Overseas Issuance and Listing (“Notice of Filing”) from the China Securities Regulatory Commission (“CSRC”) giving the green light for its proposed initial public offering of no more than 625 million new shares in Hong Kong and its listing on the Hong Kong Stock Exchange (“HKEX”). The Notice of Filing paves the way for SF Holdings to update its Hong Kong IPO application and have it approved by the HKEX before the official launch of its Hong Kong IPO. Based on the Notice of Filing, SF Holdings has now become the first Chinese company whose overseas IPO application was approved by the CSRC (perhaps after consultations with other ministries behind the CSRC) exempted from application of the Special Administrative Measures for Foreign Investment Access (Negative List)(“Negative List”), i.e., if a Chinese enterprise from an industry prohibited from foreign investment according to the Negative List seeks an overseas IPO and listing, its IPO application must be approved by the PRC competent authorities; even if approved, overseas investors are not allowed to participate in such Chinese enterprise’s operation and management, and the overseas investors’ shareholdings should be subject to the restrictions in the regulations of overseas investors’ domestic securities investments – in SF Holdings’ case, the business that is prohibited by foreign-invested enterprises (including companies with its shares listed on overseas capital markets) refers to domestic express mail delivery services.

The green light from the CSRC is a must for the hearing and approval of overseas IPO applications by Chinese companies. Under the CSRC’s Trial Measures for the Issuance of Securities and Listing Overseas by Domestic Enterprises introduced on March 31, 2023, Chinese enterprises seeking overseas listings need to submit filing reports, PRC legal opinions and all related supporting materials to the CSRC within three working days of submitting its IPO application to the HKEX or the other foreign securities regulators. 

According to the CSRC’s official website, as of May 31, 2024, a total of 99 companies are in the process of filing. This includes those whose application materials have been accepted by the CSRC and those who are required to submit supplementary materials. It excludes companies that have completed overseas listing process. Among them, 76 companies are planning to list in Hong Kong, 22 companies are planning to list in the United States, and one company is planning to list in Switzerland. As of May 31, 2024, a total of 75 companies have received the Notice of Filing. This includes 41 companies planning to list in Hong Kong, with an average review period of approximately 179 days (excluding companies with unknown review periods due to undisclosed applications), and 34 companies planning to list in the United States, with an average review period of 190 days.