US Government Shutdown May Impact Chinese Firms’ Listing Plans in Country
ZHANG YUANKE
(Yicai Global) Jan. 21 — The continued partial shutdown of the US government has impacted reviews of initial public offering applications in the country and could delay listing plans for Chinese firms.
Stateside listings of twenty Chinese companies have been affected so far, an insider at one of the firms told Yicai Global. IPOs planned for spring may have to wait until fall if the closure continues.
Chinese New Year holiday plans for personnel at the firm could be in jeopardy as they eagerly await further news from the US.
The firm must complete its IPO before the summer, the insider said, explaining that a delay would be troublesome. It will not only increase costs but also impact credit improvements and disrupt working plans for the year. Some of the company’s employees are even preparing to spend the Spring Festival in the US in preparation for any new developments, he added.
More than 400,000 federal workers are currently on leave without pay over the shutdown. Democrats and Republicans are at odds over President Trump’s budgetary request for a wall on the border with Mexico.
The US Securities and Exchange Commission ceased operations on Dec. 27 with only 285 staff of a total 4,400 remaining on call to handle emergencies involving market integrity and investor protections. IPO applications remain off the table currently.
The House of Representatives voted on a democratic funding bill on Jan. 16 aimed at reopening the federal government until the end of the month. However, it failed to pass as it did not receive the two-thirds support required.
Half of the 20 Chinese firms affected by the shutdown are from the finance sector. They include Gewang Biotechnology, Huafu Educational Consulting, Samoyed Internet Financial Services, Taixuan Network Technology and Futu Securities International.
The insider’s company had expected to ring the IPO bell in the second half of this month but the SEC confirmed that its service would be unavailable for the foreseeable future. Roadshows and any share offerings are impossible without the SEC’s go-ahead, he said, adding that everyone is on standby for now.
The process for Chinese companies going public in the US is transparent and clear. A special SEC team made up of lawyers, accountants, analysts and industry professionals, review a company’s registration statement in accordance with regulations. They confirm whether it meets the authority’s requirements and thoroughly examine and verify all information.
The registration statement comes into effect automatically 20 days after the submission based on relevant rules. Terms for extending the period automatically also exist. Applicants will generally receive the first opinion letter from the SEC within four to six weeks of the first submission.
Editor: William Clegg
