China to issue first fine for overseas listing rule breach

China's securities regulator is planning to issue its first fine in a case of violating overseas listing registration requirements, underscoring its stepped-up efforts to deter violations while keeping channels open for overseas listings, including in the United States.

The China Securities Regulatory Commission said on Friday that its Heilongjiang bureau has issued a prior notice of administrative penalties against a domestic company and related intermediaries for failing to complete required registration procedures before listing overseas

The case marks the first enforcement action under China's trial rules governing offshore listings by domestic firms, which took effect in 2023.

It was found that Zhong Guo Liang Tou Group Ltd, a food company based in Heilongjiang province, had proceeded with a listing on Nasdaq via a merger deal without completing the registration process with the domestic regulator.

The company was trading for only a matter of hours before being suspended by Nasdaq, and further arrangements are pending decisions by US regulators and the exchange, with Chinese authorities maintaining communication and coordination with their counterparts.

Proposed penalties include fines on the company, responsible executives and intermediary institutions involved in the case, totaling 5.2 million yuan ($760,646), according to the CSRC.

The regulator stressed that while it will continue to support qualified companies in tapping overseas markets in compliance with rules, it will also step up enforcement against illegal activities and strengthen cross-border regulatory cooperation to safeguard market order and investor rights.

Informed sources told China Daily that domestic registration procedures for Chinese firms seeking US listings have been progressing normally, and Chinese authorities will continue to keep the channel open and advance qualified listings.

Also on Friday, the CSRC approved the registration from DSC Holdings Ltd, a software company operating in Zhejiang province, seeking to list on Nasdaq, signaling that the channel for compliant overseas listings remains open and functioning.