China Depositary Receipt (CDR) refers to the securities issued by depository institutions in China on the basis of overseas securities, representing the rights and interests of overseas basic securities. Generally speaking, overseas listed companies (including China Mainland and Hongkong) will deposit some of their issued and listed shares in local custodian banks, and domestic custodian banks will issue investment certificates, list them in the domestic A-share market, settle in RMB, and trade them by domestic investors, thus realizing the off-site trading of shares.
On September 22nd, 2020, China Securities Regulatory Commission issued and approved the registration of public offering depositary receipts of No.9 company's science and technology innovation board.
CDR was first proposed due to the strong mainland financing demand of a large number of "red chip" companies listed in Hong Kong after the 1997 Asian financial crisis, and the Hong Kong government and the China Securities Regulatory Commission also responded positively. Since 200 1, the theoretical circle has been in a heated debate, and there are different views on whether to implement CDR.
Reasons for the development of CDR
Due to domestic listing standards and other reasons, in the past, many domestic start-ups chose to register and list abroad, and developed and expanded. For example, JD.COM was listed on NASDAQ, and Tencent Holdings was listed on the Hong Kong Stock Exchange. However, these companies want to go back to China for financing, but they are facing problems-if they do not move their registered places back to China, it will be difficult to finance and trade in the A-share market according to existing laws and regulations; However, if the registered place is moved back to China, it will involve a complicated and long process such as privatization and dismantling VIE architecture.
In order to meet the needs of the development and innovation of the real economy and learn from the experience of mature international markets, the CSRC has made some important institutional arrangements to increase the inclusiveness and adaptability of the listing system of the first batch of pilot enterprises. Through a series of supporting systems and rules, the above problems have been solved, and the cost of "unicorn" enterprises landing in the A-share market has been greatly reduced.
Reference to the above content: Baidu Encyclopedia-Chinese Depositary Receipts