The China Securities Regulatory Commission (CSRC) on May 18 clarified that overseas investors’ shareholding rights are recognized on the mainland in the Shanghai-Hong Kong Stock Connect.
Article 18 of the Administrative Measures for Registration and Settlement of Securities (the “Settlement Measures”) states that “securities shall be recorded in the accounts of the securities holders, unless laws, administrative regulations or CSRC rules prescribe that the securities shall be recorded in accounts opened in the name of nominee holders,” the CSRC said in a statement.
Hence the Settlement Measures expressly provides for the concept of nominee shareholding, the CSRC said.
Article 13 of the Certain Provisions on Shanghai-Hong Kong Stock Connect Pilot Program states that shares acquired by investors through the Northbound Trading Link shall be registered in the name of Hong Kong Securities Clearing Company (HKSCC) and that “investors are legally entitled to the rights and benefits of shares acquired through the Northbound Trading Link.”
Meanwhile, overseas shareholders can take legal action directly in courts on the mainland, according to the CSRC.
The Shanghai-Hong Kong Stock Connect was launched in November last year, allowing overseas investors to trade Shanghai shares via the Hong Kong Exchanges & Clearing (HKEx).