China Issues Draft Measures That Affect The IPOs Of Chinese Companies

Those who follow legal trends in the People's Republic of China ("China" or the "PRC") have become accustomed to government agencies taking actions in specific industries or related to particular business activities in the period around major meetings or events. The centennial anniversary of the Chinese Communist Party was no different. The Chinese government made clear in the days following the centennial celebration its continued emphasis on protecting data within its borders.

In the last few months, several prominent Chinese companies with significant data stockpiles in China have attempted to complete or have completed their IPOs in the US only to come under the scrutiny of a data security review and investigation by the Cyberspace Administration of China. These companies and their IPOs were significantly impacted by these developments and face the difficult task of navigating the balance of disclosure requirements and compliance with Chinese regulators.