Many foreign companies are reluctant to issue securities in the US capital market due to the strict registration and information disclosure requirements of US federal laws. Therefore, the US Securities Regulatory Commission drafted the "144A Rule" in 1988, and promulgated and implemented it in 1990 (that is, "resale of securities by private market institutions"), with the main purpose of attracting foreign enterprises to issue securities in the US capital market and improving the liquidity and effectiveness of the domestic private equity market.
According to rule 144A, issuers can issue securities that are not restricted by the requirements of registration and information disclosure of the US Securities Regulatory Commission, but these securities can only be issued to QIBs (qualified institutional buyers) in the private equity market and can only be traded between QIBs, which is called restricted securities, that is, ADR under rule 144A. In order to promote the issuance and trading of such securities, NASD has established a computerized portal system with trading and information release functions, which can only be accessed by qualified intermediaries and some qualified dealers and brokers.
The characteristic of this kind of securities is that as long as foreign companies provide relevant information according to the requirements of the US Securities Regulatory Commission, the issuer can not disclose financial information to the securities purchaser, otherwise, the issuer should briefly explain its business nature, products produced, services provided and financial status at the request of the purchaser. These financial information include the balance sheet and income statement of the last three years, which can be compiled according to the accounting principles of the country where the issuer is located. This provision of the 144A rule effectively attracts foreign companies to enter the US capital market by reducing the burden of information disclosure.
According to the rule of 144A, the so-called QIB includes the following institutions: 1, nine institutions, including insurance companies and investment companies, manage their own accounts or other entrusted accounts of QIBs, and hold and fully invest securities with a value exceeding 1 billion dollars issued by unrelated persons; 2. A securities firm registered in accordance with the Securities Exchange Law manages its own account or other entrusted accounts of QIBs, and the value of securities issued by non-associated persons with full investment exceeds $6,543,800,000; 3. Securities dealers registered according to the Securities Exchange Law engage in risk-free customer transactions on behalf of QIB. 4. Investment companies registered according to the Investment Company Law manage their own accounts or other entrusted accounts of QIBS, and their investment company families hold securities with a value of more than US$ 6,543.8 billion issued by non-related parties. 5. All its shareholders are institutions of QIB, which manage their own accounts or other entrusted accounts of QIBS. 6. The value of securities issued by wholly-invested unrelated persons by domestic or foreign banks, savings and loan associations or similar institutions exceeds US$ 6,543.8+billion, and the audited net value shown in their latest annual financial statements exceeds US$ 25 million.
The conditions for foreign enterprises to issue or sell restricted securities, that is, CDRs under the 144 rule, are as follows: 1. Securities are only issued or sold to qualified intermediaries, sales organizations or institutions that are considered as qualified intermediaries by those who sell on their behalf; 2. The securities sales organization and its sales personnel shall take reasonable measures to make the buyer realize that the sales organization has complied with the clause 144A; 3. Securities issued or sold: A. The securities registered with the Company, listed on the national exchanges or traded in the automatic trading system between dealers according to the US Securities Exchange Law are not of the same kind. Securities that can be converted or exchanged for securities listed on the exchange, and the actual conversion premium is less than 18%, are the same kind of securities as the corresponding securities listed on the exchange; Warrants whose subject matter is securities listed on the exchange and whose validity period is less than 3 years, or whose actual premium is less than 10%, are similar to those issued when exercising. 2. Securities that are not issued by open-end funds, unit investment trusts or denomination certificate companies registered in accordance with the Investment Company Law.
Many foreign companies are reluctant to issue securities in the US capital market due to the strict registration and information disclosure requirements of US federal laws. Therefore, the US Securities Regulatory Commission drafted the "144A Rule" in 1988, and promulgated and implemented it in 1990 (that is, "resale of securities by private market institutions"), with the main purpose of attracting foreign enterprises to issue securities in the US capital market and improving the liquidity and effectiveness of the domestic private equity market.
According to rule 144A, issuers can issue securities that are not restricted by the requirements of registration and information disclosure of the US Securities Regulatory Commission, but these securities can only be issued to QIBs (qualified institutional buyers) in the private equity market and can only be traded between QIBs, which is called restricted securities, that is, ADR under rule 144A. In order to promote the issuance and trading of such securities, NASD has established a computerized portal system with trading and information release functions, which can only be accessed by qualified intermediaries and some qualified dealers and brokers.
The characteristic of this kind of securities is that as long as foreign companies provide relevant information according to the requirements of the US Securities Regulatory Commission, the issuer can not disclose financial information to the securities purchaser, otherwise, the issuer should briefly explain its business nature, products produced, services provided and financial status at the request of the purchaser. These financial information include the balance sheet and income statement of the last three years, which can be compiled according to the accounting principles of the country where the issuer is located. This provision of the 144A rule effectively attracts foreign companies to enter the US capital market by reducing the burden of information disclosure.
According to the rule of 144A, the so-called QIB includes the following institutions: 1, nine institutions, including insurance companies and investment companies, manage their own accounts or other entrusted accounts of QIBs, and hold and fully invest securities with a value exceeding 1 billion dollars issued by unrelated persons; 2. A securities firm registered in accordance with the Securities Exchange Law manages its own account or other entrusted accounts of QIBs, and the value of securities issued by non-associated persons with full investment exceeds $6,543,800,000; 3. Securities dealers registered according to the Securities Exchange Law engage in risk-free customer transactions on behalf of QIB. 4. Investment companies registered according to the Investment Company Law manage their own accounts or other entrusted accounts of QIBS, and their investment company families hold securities with a value of more than US$ 6,543.8 billion issued by non-related parties. 5. All its shareholders are institutions of QIB, which manage their own accounts or other entrusted accounts of QIBS. 6. The value of securities issued by wholly-invested unrelated persons by domestic or foreign banks, savings and loan associations or similar institutions exceeds US$ 6,543.8+billion, and the audited net value shown in their latest annual financial statements exceeds US$ 25 million.
The conditions for foreign enterprises to issue or sell restricted securities, that is, CDRs under the 144 rule, are as follows: 1. Securities are only issued or sold to qualified intermediaries, sales organizations or institutions that are considered as qualified intermediaries by those who sell on their behalf; 2. The securities sales organization and its sales personnel shall take reasonable measures to make the buyer realize that the sales organization has complied with the clause 144A; 3. Securities issued or sold: A. The securities registered with the Company, listed on the national exchanges or traded in the automatic trading system between dealers according to the US Securities Exchange Law are not of the same kind. Securities that can be converted or exchanged for securities listed on the exchange, and the actual conversion premium is less than 18%, are the same kind of securities as the corresponding securities listed on the exchange; Warrants whose subject matter is securities listed on the exchange and whose validity period is less than 3 years, or whose actual premium is less than 10%, are similar to those issued when exercising. 2. Securities that are not issued by open-end funds, unit investment trusts or denomination certificate companies registered in accordance with the Investment Company Law.
Many foreign companies are reluctant to issue securities in the US capital market, because the US federal law has strict requirements for registration and information disclosure. Therefore, the US Securities Regulatory Commission drafted the "144A Rule" in 1988, and promulgated and implemented it in 1990 (that is, "resale of securities by private market institutions"), with the main purpose of attracting foreign enterprises to issue securities in the US capital market and improving the liquidity and effectiveness of the domestic private equity market.
According to rule 144A, issuers can issue securities that are not restricted by the requirements of registration and information disclosure of the US Securities Regulatory Commission, but these securities can only be issued to QIBs (qualified institutional buyers) in the private equity market and can only be traded between QIBs, which is called restricted securities, that is, ADR under rule 144A. In order to promote the issuance and trading of such securities, NASD has established a computerized portal system with trading and information release functions, which can only be accessed by qualified intermediaries and some qualified dealers and brokers.
The characteristic of this kind of securities is that as long as foreign companies provide relevant information according to the requirements of the US Securities Regulatory Commission, the issuer can not disclose financial information to the securities purchaser, otherwise, the issuer should briefly explain its business nature, products produced, services provided and financial status at the request of the purchaser. These financial information include the balance sheet and income statement of the last three years, which can be compiled according to the accounting principles of the country where the issuer is located. This provision of the 144A rule effectively attracts foreign companies to enter the US capital market by reducing the burden of information disclosure.
According to the rule of 144A, the so-called QIB includes the following institutions: 1, nine institutions, including insurance companies and investment companies, manage their own accounts or other entrusted accounts of QIBs, and hold and fully invest securities with a value exceeding 1 billion dollars issued by unrelated persons; 2. A securities firm registered in accordance with the Securities Exchange Law manages its own account or other entrusted accounts of QIBs, and the value of securities issued by non-associated persons with full investment exceeds $6,543,800,000; 3. Securities dealers registered according to the Securities Exchange Law engage in risk-free customer transactions on behalf of QIB. 4. Investment companies registered according to the Investment Company Law manage their own accounts or other entrusted accounts of QIBS, and their investment company families hold securities with a value of more than US$ 6,543.8 billion issued by non-related parties. 5. All its shareholders are institutions of QIB, which manage their own accounts or other entrusted accounts of QIBS. 6. The value of securities issued by wholly-invested unrelated persons by domestic or foreign banks, savings and loan associations or similar institutions exceeds US$ 6,543.8+billion, and the audited net value shown in their latest annual financial statements exceeds US$ 25 million.
The conditions for foreign enterprises to issue or sell restricted securities, that is, CDRs under the 144 rule, are as follows: 1. Securities are only issued or sold to qualified intermediaries, sales organizations or institutions that are considered as qualified intermediaries by those who sell on their behalf; 2. The securities sales organization and its sales personnel shall take reasonable measures to make the buyer realize that the sales organization has complied with the clause 144A; 3. Securities issued or sold: A. The securities registered with the Company, listed on the national exchanges or traded in the automatic trading system between dealers according to the US Securities Exchange Law are not of the same kind. Securities that can be converted or exchanged for securities listed on the exchange, and the actual conversion premium is less than 18%, are the same kind of securities as the corresponding securities listed on the exchange; Warrants whose subject matter is securities listed on the exchange and whose validity period is less than 3 years, or whose actual premium is less than 10%, are similar to those issued when exercising. 2. Securities that are not issued by open-end funds, unit investment trusts or denomination certificate companies registered in accordance with the Investment Company Law.