China will require tech companies to pass cyber security screening prior to IPO resistance to cyber attacks. Such an ultimatum was put forward in connection with tightening control over information collected by tech giants, Bloomberg reports.
Before an IPO (initial public offering), companies will have to get approval from the China Cybersecurity Authority. The new rules are due to the expansion of legislation, which now spelled out requirements for data security and privacy on the Internet. The government plans to monitor private companies' compliance with cybersecurity measures.
New rules may cause dissatisfaction: technology firms expected to go public on the Hong Kong stock exchange, as US regulators also began to scrutinize new listings. US regulators plan to exclude from the quotation lists of American exchanges the shares of companies whose auditors refuse to open their accounts to supervisory authorities. Such measures could lead to the withdrawal of Chinese securities from US exchanges worth almost two trillion dollars from 2024.
Chinese Internet companies that collect data and are related to national security will also need to get approval from the authorities before mergers, divisions and restructuring. Without regulatory approval, tech giants will not be able to establish overseas headquarters.
The National Bank of China announced its intention to protect user privacy and data security in early October 2021. Regulator Chairman Yi Gang promised that the country will continue to impose new measures against companies from the financial technology sector.