Foreign investors, from 8 September 2006, are permitted to issue shares in payment for equity in China. Previously, such share swaps existed in a regulatory vacuum. A number of criteria must now be satisfied, including:

  • the shares used for payment in China must be listed on an overseas stock exchange (except in respect of certain special purpose vehicles controlled by Chinese residents);
  • the trading price of the shares must have been stable during the most recent year; and
  • a financial adviser qualified in China must investigate and report on the overseas listed company.