Improvement Of China Depository Receipt Disclosure Rules

Depository receipts are a long-established investment instrument,first pioneered by JP Morgan in the U.S.,which can facilitate investors to realize investment in domestic enterprises,break through the differences in time,space and currency,and is a very popular new cross-border investment and financing channel,and as of now,more than 4,000 depository receipts have been issued,but China’s depository receipts system started late,and in 2018 China s regulatory authorities only started to build the policy and institutional framework for Chinese depositary receipts,which subsequently ushered in the first application for issuance of depositary receipts until 2 years later,when the first successful issuance of Chinese depositary receipts emerged.The development of the depositary receipt system can break through the current dilemma of losing high-quality enterprises to overseas listing and financing,and at the same time can promote the further opening of China’s securities market,but the late start and little practice of China’s depositary receipt system have led to many gaps in the current system,and it is of practical significance to improve the depositary receipt system.As depositary receipts have the characteristics of long issuance chain and complex trading mechanism,information disclosure is more difficult and has a more important position in the successful issuance of depositary receipts and the protection of investors in depositary receipts.The current rules of information disclosure system only stipulate that the issuer of foreign securities is the obligor of information disclosure,and the content of information to be disclosed is only some highly abstract and principled expressions,which cannot effectively protect investors’ right to know and thus violate their right to fair trade.The abstract information disclosure requirements cannot provide sufficient guidance for the disclosure of information by various parties during the issuance of depositary receipts.This paper analyzes the concept and operation structure of depositary receipts,summarizes the characteristics that distinguish them from ordinary securities,and introduces the concept of business trust to analyze the legal relationship among the subjects,so as to lay a theoretical foundation for the information disclosure system.The paper also draws on the experience and market practice of the disclosure system in overseas countries(regions) with earlier and more mature development of depositary receipts system,such as the United States and Chinese Taiwan,and makes suggestions for improvement in light of the current status of information disclosure rules in China.This paper concludes that,at present,China should add the depositary as an information disclosure obligor and distinguish between the issuance and listing stages of depositary receipts,with the depositary and the issuer sharing the information disclosure obligations in both stages,and in the issuance stage of depositary receipts,the depositary and the issuer should disclose information about the underlying securities and the depositary receipts respectively,and in the listing stage,the issuer should be the main issuer and the depositary should be the secondary provider of continuous In the listing stage,the issuer should be the main provider of information disclosure,and the depositary should be the secondary provider.At the same time,we should refer to the U.S.Uniform Information Disclosure Rules to clarify the scope of information that should be disclosed and to define the standards of material events that should be reported in a timely manner to enhance its practicality.