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China Orders Firms to Undergo Security Review Ahead of Overseas Listings
A man walks past the New York Stock Exchange on the corner of Wall and Broad streets in New York City. Photo: Reuters

Beijing has widened the clampdown on its ‘platform economy’ with new measures demanding companies with large data stores must surrender to a pre-IPO investigation

 

China’s cyberspace regulator has declared any company with data of more than 1 million users must undergo a security review before listing its shares overseas, broadening a clampdown on its large “platform economy”. 

The security review, announced on Saturday by the Cyberspace Administration of China (CAC), will put a focus on the risks of data being affected, controlled or manipulated by foreign governments after overseas listings.

China’s cyberspace regulators are imposing tighter restrictions on data collection and data storage. Authorities are also more broadly pushing for companies to list domestically.

 

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Two new sets of rules, the Data Security Law and the Personal Information Protection Law, which cover data storage and data privacy respectively, are set to come into effect this year. 

Saturday’s announcement will also require firms to submit the IPO materials they plan to file for review. 

The security review, according to the CAC, will consider national security risks as “risk of supply chain interruption due to political, diplomatic, trade and other factors,” and risk of key data “maliciously used by foreign governments after listing in foreign countries”.

 

DIDI PROBE

The CAC is seeking public opinion on the proposed rules.

The notice comes after Chinese authorities launched a probe of ride-hailing giant Didi Global Inc for allegedly violating user privacy, just days after its listing in New York.

Didi’s shares plunged 20% on news of the probe, and the company said its revenue would be affected.

 

  • Reporting by Reuters

 

Read more:

China’s Crackdown on Didi Intensifies With Removal of 25 More Apps

Beijing Blocks Tencent’s ‘Anti-Competition’ $5.3bn Video Games Mega-Merger

 

Sean OMeara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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