How to Harness a Unicorn? Demystifying China’s Reform of Share Listing Rules and Chinese Depositary Receipts (CDRs)

This article introduces and analyses China's latest reform of securities laws to attract domestic unicorn companies (with a valuation over $1 billion) and tech giants to list or dual-list their shares on mainland China's Shanghai and Shenzhen Stock Exchanges. In the past, most Chinese tech businesses tried to obtain a listing in either Hong Kong or New York to raise funds, owing to China's onerous listing rules and various legal restrictions on critical issues such as the variable interest entity, dual-share structure and the issuers' profitability. However, the recently introduced initial public offering (IPO) green channel and Chinese depositary receipts (CDRs) aim to entice Chinese businesses to list their shares at home. The Chinese smartphone-maker Xiaomi, as well as the British bank HSBC, are said to be the first group of global companies planning to issue CDRs and float their shares in mainland China