INTRODUCTION

　　With the rapid development and the further opening up of Chinese economy, listing on foreign stock exchanges has become important means for Chinese enterprises to access to international capital markets and realize the strategies of internationalization. Overseas listing help Chinese enterprises widen their channels for finance, improve their corporate governance, enhance their international competitiveness, and establish positive international images.

　　In the early 1990’s, China began to establish its national securities markets. After the birth of the Shanghai Stock Exchange（SHSE） and Shenzhen Stock Exchange（SZSE） in late 1990, the market for domestically listed foreign capital shares（B shares）[1] was also created. Subsequently, a program for supporting the overseas listing of joint-stock enterprises was enforced under the direct leadership of the PRC State Council（i.e. China’s highest organ of State administration）。 At that time, there are three main objectives that were pursued by the program: （i） to learn from the experience of mature securities markets; （ii） to promote the reform of state-owned enterprises and establish corporate governance for them; and （iii） to attract foreign funds which were scarce at that time.[2]

　　On 19 June, 1993, the China Securities Regulatory Commission（CSRC）， the Securities and Futures Commission of Hong Kong（HKSFC）， the Shanghai Stock Exchange（SHSE）， the Shenzhen Stock Exchange（SZSE） and the Hong Kong Stock Exchange（HKEX） signed a five-party “Memorandum of Regulatory Cooperation” which laid the foundation for regulatory cooperation and law enforcement on securities related issues between the PRC Mainland and Hong Kong. In July the same year, Tsingtao Brewery Company Limited （0168, HK） accomplished an initial public issue of foreign capital shares listed overseas （H shares）[3] and was listed on the HKEX. This is the first Chinese enterprise that is directly listed abroad.

　　After the mid-1990’s, Chinese enterprises have gradually developed two models for overseas listing, i.e. direct overseas listing and indirect overseas listing, and the regulatory frameworks have been established respectively. However, the relevant Chinese laws and regulations have not historically defined the concepts of direct overseas listing and indirect overseas listing. In practice, direct overseas listing refers to the overseas issuance and listing of securities by a joint-stock limited company incorporated in the PRC Mainland, while indirect overseas listing refers to the issuance and listing of securities by a company incorporated outside the PRC Mainland after the acquisition of the stakes, assets or revenue of one or more domestic enterprises in the PRC Mainland（popularly known as red-chip listing）。

　　As of the end of May 2010, 165 domestic enterprises are directly listed abroad （including 6 enterprises that have been delisted） and the cumulative capital raised exceeded USD 120 billion. With regard to the target markets, enterprises that are directly listed abroad are mainly listed on the HKEX. Among the existing 159 enterprises that are directly listed abroad, 156 enterprises are listed in Hong Kong, three are listed on　the Singapore Stock Exchange. Among the companies listed in Hong Kong, 15 are also listed on the New York Stock Exchange （NYSE）， the London Stock Exchange （LSE） or the Singapore Stock Exchange （SGX）。 In particular, after the signing of the “Closer Economic Partnership Arrangement” （CEPA） between the PRC Mainland and Hong Kong in June 2003, a group of large-scale state-controlled enterprises have been listed in Hong Kong and have set the records in terms of the issue size. For example, Industrial and Commercial Bank of China Limited （ICBC）（1398, HK） issued H shares to raise approximately USD 16 billion in October 2006. This has so far been the world’s largest IPO project. The subscription funds frozen in the IPO process of China Railway Construction Corporation Limited （1186, HK） amounted to approximately HK$ 631.2 billion and represented the historical record in the Hong Kong market.

　　In addition, the operation of direct overseas listing has been actively innovated. For example, the ICBC and China CITIC Bank Corporation Limited （0998, HK） successfully accomplished the “A+H” offering plan, which means the concurrent offering and listing of A shares and H shares at the same price on the same date.[4] China Railway Group Limited （0390, HK）， China Railway Construction Corporation Limited, China South Locomotive and Rolling Stock Corporation Limited （1766, HK） and Metallurgical Corporation of China Ltd. （1618, HK） successfully implemented the “first A then H” offering plan, which means the completion of H shares offering within a short period of time following A shares offering.[5]