China increases scrutiny of US IPO-bound firms

BEIJING: Chinese regulators are considering pressing data-rich companies to hand over management and supervision of their data to third-party firms if they want US stock listings, sources said, as part of Beijing’s unprecedented scrutiny of private sector firms.
The regulators believe bringing in third-party information security firms, ideally state-backed, to manage and monitor IPO hopefuls’ data could effectively limit their ability to transfer Chinese onshore data overseas, sources said.
That would help ease Beijing’s growing concerns that a foreign listing might force such Chinese companies to hand over some of their data to foreign entities and undermine national security, they added.
The plan is one of several proposals under consideration by Chinese regulators as Beijing has tightened its grip on the country’s internet platforms in recent months.