Discussion Of Legal Supervision On Red-Chips Listing

The red-chips listing of Chinese private enterprises is that some shareholders of the private enterprise register a shell company in a famous offshore financial centers in the name of a person, which M & A (Merger and Acquisition) the domestic enterprise; at last this shell company list in the foreign Stock Exchanges. This emerging economic phenomenon greatly challenges the supervising capability of the government.Chapter one of this article analyses the concept of red-chips listing and its classification; and the second section details the external and internal reasons why lots of private enterprises chose red-chips listing.Chapter Two starts with the definition for "supervision" and classification of the legal relationship that legal supervision of red-chips belongs to. Secondly based on the general theory of the Market Failure and Government Shortcoming, and combined with the particularity of stock market, the following sections discuss the necessity of the supervision, the official supervising body and principle we are bound to observe. At the end, the goal to supervise is to use the positive side and avoid the negative side of red-chips listing.Chapter Three takes a back look of the history of all the supervising measures that adopted by different administrative departments. And on the basis of a notice released by State Administration of Foreign Exchange(SAFX), and a regulation promulgated by six administrations together on 8th, Aug 2006——China Security Regulatory Commission (CSRC) , Ministry of Commerce, SAFX, State Administration for Industry and Commerce, State-owned Assets Supervision and Administration Commission, and State Administration of Taxation. These two regulations for the first time take the red-chips listing of private enterprises under supervision in all respects from the establishment of the Special Purpose Vehicle (SPV), to the return of financing.. Section two was made to analyze these supervising measures one by one and their influence respectively. In Section Three there are some movements the government have taken or is going to take for international cooperation and coordination.The author puts forward her own views and some pieces of advice both theoretically and practically on the basis of that there are still some problems after the new regulation in Chapter Four.