In recent years, Chinese capital markets have gradually started to lead the boom in capital markets around the world. For a long time, there has been a marked difference in the value of the H -share and A-share markets. An increasing number of large enterprises have broadened financing channels by virtue of the A+H model. Certain enterprises that have erected a red-chip structure are now giving up on offshore markets, demolishing their red-chip structures and returning to the A-share markets on the mainland.
In contrast with the traditional return of red chips to mainland markets, at the end of 2013 Digital China Holdings smoothly returned to A-shares from H-shares through a spin-off and backdoor listing, opening a new means of financing for companies listed offshore.
On 12 July 2013, Digital China delivered a letter to Hong Kong Exchanges and Clearing (HKEx), applying to spin off its subsidiary Digital China Information Service (DCITS), with the latter to make a backdoor listing on the Shenzhen Stock Exchange using *ST Taiguang (*ST before a company name indicates there is a risk of delisting). On 26 December, *ST Taiguang published a new share listing report. The 340 million new shares issued by *ST Taiguang to merge DCITS by absorption and raise ancillary funds were listed on 30 December.
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Lai Jihong (tel: +86 755 3325 6898; email: firstname.lastname@example.org) and Chen Limin (tel: +86 755 3325 6900; email: email@example.com) are partners at Zhong Lun Law Firm in Shenzhen