Deals
SEC Leans Hard on China IPOs to Explain Offshore Structures
- Cash flows among onshore and offshore entities under scrutiny
- Companies face as many as 20 additional requests for detail
Photographer: Andrew Harrer/Bloomberg
This article is for subscribers only.
Chinese companies applying to go public in the U.S. are facing increasingly detailed questions from the Securities and Exchange Commission about their offshore corporate structures, according to people familiar with the matter.
Many of the SEC’s queries have focused on the nature and direction of cash flows through so-called variable interest entities, which allow Chinese companies to circumvent Beijing’s restrictions on foreign ownership, the people said, asking not to be identified because the discussions are private.