China has upped its regulations for online companies to be listed on overseas stock exchanges as it tightens its hold on an expanding technology sector.
Starting in mid-February, the Cyberspace Administration of China (CAC), a Beijing-based central internet regulator for the People’s Republic of China, will implement new rules that require platform companies with more than 1 million users to undergo a security review before listing their shares abroad.
“With stock market listings there is a risk that key information infrastructure, core data, important data or a large amount of personal information could be impacted, controlled or maliciously used by foreign governments,” the CAC wrote on its WeChat account.
The agency said the new rules are focused on companies that perform data processing activities which could impact national security. It is intended to examine risks of data being affected, controlled or manipulated by foreign governments after overseas listings, the CAC said.
The network security review process, first proposed last year, will only allow overseas stock market listings if regulators conclude the company’s data processing activities will not threaten the country’s safety.
This is the latest effort to strengthen regulations by the CAC as it seeks to control big companies and eliminate anti-competitive behavior.
Last year, China enacted its first major data protection measure and announced its probe into Didi Global, a China-based ride-hailing company, after its initial public offering (IPO) in the U.S.
In December, Didi intended to delist in the U.S. and pursue a listing in Hong Kong.
Read more: Didi to Pull US Listing in Favor of Hong Kong
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