What is a red chip company and what does a red chip company mean

A red-chip enterprise refers to a company incorporated outside Chinese mainland and controlled by a Chinese ** institution that needs to obtain special approval, and an overseas non-state-owned enterprise that has passed the review of the Hong Kong Stock Exchange refers to a company incorporated outside Chinese mainland and controlled by an individual in the Mainland. Offshore companies are usually listed through round-trip investment.

Foreign mergers and acquisitions require the approval of the Ministry of Commerce; Registration with the State Administration of Foreign Exchange is required; The overseas listing and trading of SPVs shall be subject to the approval of the ***** regulatory authority; Subject to review by the Hong Kong Stock Exchange.

Red-chip companies. This means that the business is registered abroad, usually in Cayman, Bermuda or the British Virgin Islands.

and other places, local laws and accounting systems apply, but the main assets and business of the enterprise are in Chinese mainland.

with H shares. Compared with listings, the Hong Kong Securities and Futures Commission has more lenient rules for red-chip listings, and listing fees are lower. to red chips.

In the form of listing, it is easier for the original shareholders to cash out than H shares (listed on the main board of Hong Kong, the major shareholder can ** the shares listed in the prospectus and actually owned by him after 6 months of listing).

Red-chip listings are divided into red-chip main boards and red-chip gems.

The red-chip main board is mainly dominated by state-owned enterprises, but there are also some private enterprises. The red-chip GEM is mainly based on the listing of many mainland private enterprises in Hong Kong.

In the early 90's, the concept of red chips was born in the Hong Kong ** market. Hong Kong and Randy International investors refer to ** with the concept of Chinese mainland registered overseas and listed in Hong Kong as red chips. On June 16, 1997, the Red Chip Index was launched.

In the early days, red chips were mainly transformed by Chinese companies after acquiring small and medium-sized listed companies in Hong Kong, such as CITIC Pacific.

The red-chip stocks that emerged later were mainly formed by some mainland provinces and municipalities that reorganized their window companies in Hong Kong and listed them in Hong Kong, such as Beijing Holdings.

Extended Information] 1. Blue chips.

It refers to the ordinary ** of a company with a stable earnings record and can regularly pay generous dividends, and is recognized as a company with good performance"Performing stocks"。Generally, the largest controlling stake, often referred to as having more than 30% of the equity, is called a blue chip stock;

2. Red chips refer to ** with the concept of Chinese mainland registered outside China and listed in Hong Kong. "With the concept of Chinese mainland" mainly refers to Chinese holding and main business in Chinese mainland.

3. The difference between blue chips and red chips.

1.The place of transaction is different.

Red chips are only traded in Hong Kong**, not in other regions, and blue chips are tradable in all regions, as long as you find a qualified **, you can be called a blue chip stock.

2.The definition is different.

The definition of Lanling operational stocks is mainly based on the performance of **, but once the ** changes, the definition of blue chips is no longer there, so blue chips are changeable, and red chips are immutable once determined, and have nothing to do with the performance.

The difference between a red-chip structure and a VIE structure lies in the different control methods, a red-chip structure is a domestic natural person (actual controller) who indirectly controls the actual operating company in China through the establishment of an overseas company (SPV), and uses the SPV as an overseas listing.

Financing entity. On the other hand, the VIE structure is a domestic actual business entity, which is controlled by an overseas listed entity through an agreement, that is to say, the VIE structure is directly held by a domestic natural person (actual controller) with more than 50% of the equity. The main difference between the VIE structure and the traditional red-chip structure is that the domestic WFOE under the red-chip model is a shell company.

VIE is directly held by a domestic natural person (actual controller) with more than 50% of the equity, so the latter has more control than the former.

In the current development of the financial market, many company CEOs are trying to dismantle the red-chip structure and use the VIE structure to drive the controlling stake, so the red-chip structure we may see in the future has become a thing of the past.

Extended Materials. 1. Red-chip structure.

A red-chip structure refers to the establishment of offshore companies by companies in China (excluding Hong Kong, Macau and Taiwan).

The structure of injecting or transferring the assets of the domestic company to the overseas company to achieve the purpose of overseas listing and financing of the overseas holding company. It first emerged in the late 90s, and after the China Securities Regulatory Commission (CSRC) abolished the domestic review process for red-chip listings in 2003, red-chip structures were widely used on a large scale. In August 2006 the Ministry of Commerce.

Prior to the joint issuance of the Provisions on the Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (hereinafter referred to as the "Provisions"), the traditional red-chip structure had always been cross-border private placements.

Preferred structure with overseas listings. The advantage of a red-chip structure over a domestic enterprise directly applying for listing on an overseas exchange is that through the listing model of an overseas holding company, the domestic business entity can avoid restrictions on foreign investment industries, restrictions on equity liquidity, dual approval and procedures in both places, and company law.

** Law and other laws and regulations.

and the convergence of accounting rules.

2. Big red chips and small red chips.

"Red chips" can be divided into "big red chips" and "small red chips". Mainland enterprises register companies in Hong Kong and list in Hong Kong in the name of overseas Chinese holding companies ("big red chips"); Mainland enterprises set up special purpose vehicles (SPVs) overseas in the name of their shareholders or actual controllers, etc., and control them through equity or asset mergers and acquisitions or agreements.

After controlling the rights and interests of mainland enterprises, it was listed in Hong Kong in the name of a special overseas company ("small red chips").

3. The return of red chips.

When China Mobile was listed in Hong Kong, it was to raise funds in Hong Kong, and it had to set up such a company overseas, and then listed in Hong Kong, in fact, in China, and now it wants to return to China to be listed, which is called the return of red chips.

The term "red chip company" belongs to one of the core vocabulary of CMA, and learning the core vocabulary of CMA will make you feel like a fish in water in learning, which means that it refers to a company incorporated in Hong Kong, but the controlling shareholder is a Chinese entity.

A red-chip company is a company incorporated in Hong Kong but whose controlling shareholder is a Chinese entity.

In Hong Kong**, red chips refer to the shares of listed companies listed in Hong Kong, but which are directly controlled by Chinese enterprises or hold more than 3/30% of the shares.

1) Whether a stock is a red chip stock should be judged on whether the main profit comes from Chinese mainland.

2) Hong Kong's most representative red-chip index, the Hang Seng Hong Kong Chinese Enterprises Index, is determined by the proportion of Chinese shareholders' equity.

The red-chip structure is a kind of private equity transaction structure, which began to appear at the end of the 90s, is the earliest private equity structure in history, and is a slippery structure adopted by domestic enterprises in order to list abroad.

VIE structure is the abbreviation of VariableInterest Entities, literally translated as "variable interest entity", which is an evolution of the red-chip structure, which refers to the separation of a listed company registered abroad from a domestic business operation company, and the foreign listed company controls the domestic business operation company by agreement.

In Xiangfu Old Port**, red chips refer to the shares of listed companies listed in Hong Kong, but are directly controlled by Chinese enterprises or hold more than 3/3 percent of the shares. Although red chips refer to those shares that are directly controlled by Chinese enterprises or hold more than 30% of the shares, and are listed on Hong Kong's Gaoxin, this definition is still subject to a certain degree of controversy. One school of thought believes that whether a stock is a red chip stock should be judged on whether the main profit comes from Chinese mainland; The most representative red-chip index in Hong Kong, the Hang Seng Hong Kong Chinese Enterprises Index, is a representative of another faction and is determined by the proportion of Chinese shareholders' equity.

According to the definition in the Notice of the General Office of the China Securities Regulatory Commission on Several Opinions on Carrying out the Pilot Program of Domestic Issuance of Innovative Enterprises or Depositary Receipts (Guo Ban Fa 2018 No. 21 Qi Ting Round), a red-chip enterprise refers to an enterprise registered overseas and whose main business activities are in China.

A red-chip enterprise refers to a company incorporated in Chinese mainland and controlled by a Chinese ** institution that needs to obtain special approval, and an overseas non-state-owned enterprise that has passed the review of the Hong Kong Stock Exchange refers to a company incorporated outside Chinese mainland and controlled by a mainland individual, Kong Chang. Offshore companies are usually listed through round-trip investment.

Foreign mergers and acquisitions require the approval of the Ministry of Commerce; Registration with the State Administration of Foreign Exchange is required; The overseas listing and trading of SPVs shall be subject to the approval of the ***** regulatory authority; Subject to review by the Hong Kong Stock Exchange.