In the News: Hong Kong Cybersecurity Review; Social Bond Opening Up; and US Telecoms License Ban

Nov 16, 2021
| By Vincent Chow
Hong Kong IPOs also subject to cybersecurity review; social, sustainability bond issuance pilot for foreign issuers; and U.S. law bars new equipment licenses for Chinese telecoms firms

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Hong Kong Stock Exchange (Stock photo)


CAC extends cybersecurity review to Hong Kong IPOs

China is set to require PRC companies undergo a cybersecurity review before listing in Hong Kong on national security grounds. On November 14, the Cyberspace Administration of China (CAC) released the draft Regulations on the Administration of Network ​​Data Security (网络数据安全管理条例(征求意见稿)) for public comments until December 13.

The proposed requirement applies to “data-processors” looking to list in Hong Kong “which affects or may affect national security” (Article 13). What may affect national security is not specified, but the draft regulations provide examples of “important data that may endanger national security and public interest” including export control data; scientific and technological data such as artificial intelligence; and data from key industries such as telecommunications, energy and transportation.

The draft regulations clarify for the first time that the Chinese government’s planned cybersecurity review requirement for foreign IPOs extends to certain listings in Hong Kong. In July, the CAC released an updated draft version of the Cybersecurity Review Measures (Revised Draft for Comments) (网络安全审查办法(修订草案征求意见稿)), which expanded the scope of the Cybersecurity Review Measures, in effect since June 2020, to mandate cybersecurity reviews for certain “overseas listings.“ The draft did not clarify whether the requirement applied to Hong Kong listings until now. It is worth noting, however, that under the current wording of both drafts, the cybersecurity review criteria for Hong Kong IPOs could be narrower than for foreign IPOs. According to the cybersecurity review measures revised draft, and restated again in the latest draft regulations with slightly modified wording, companies that process the personal information of more than 1 million users will be required to undergo a cybersecurity review before listing overseas, a threshold that most companies listing overseas are likely to meet.  

More from CLP:

Foreign IPOs: Cybersecurity Review Revised to Address Data Security of Overseas Listings

Summary: Cyberspace Administration of China, Cybersecurity Review Measures (Revised Draft for Comments)


China permits foreign issuers to issue social, sustainability bonds

China has opened up the bond market for foreign issuers to issue social bonds and sustainability bonds. On November 11, the National Association of Financial Market Institutional Investors (NAFMII), an interbank bond market regulatory body under the People’s Bank of China, announced the launch of a pilot program for overseas issuers to issue social bonds and sustainability bonds in China.

According to an accompanying Q&A, eligible overseas issuers include foreign governmental agencies, international development institutions, and overseas non-financial enterprises. They must specify the specific projects or candidate project pool for use of proceeds before bond issuance. They must also disclose the social responsibility targets, the target population and other key information regarding their social projects.

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