(Bloomberg) -- China plans to tighten scrutiny of domestic firms’ overseas share sales and ban those whose listing could pose a national security threat.

All Chinese companies seeking initial public offerings and additional share sales abroad would have to register with the China Securities Regulatory Commission, according to a consultation paper the regulator released late Friday.

Under the proposals, firms whose overseas listings could threaten national security are barred from share sales, and companies whose activities raise cybersecurity concerns would go through security reviews. 

The changes would be the latest step by the government of President Xi Jinping to crack down on overseas listings following the New York IPO of ride-hailing giant Didi Global Inc., which proceeded despite regulatory concerns. Since then, authorities have moved to halt the flood of firms seeking to go public in the U.S., shuttering a path that’s generated billions of dollars for technology firms and their Wall Street backers. 

China to Close Loophole Used by Tech Firms for Foreign IPOs

Firms that are involved in major disputes back home over assets or core technology will also be banned from overseas listings. The CSRC would also require firms in certain sectors to obtain approval from industry watchdogs before registering with the securities regulator. 

The CSRC is seeking public opinion on the draft rules until Jan. 23. 

Companies using the so-called variable interest entities (VIE) structure would be allowed to pursue initial public offerings overseas after meeting compliance requirements, the CSRC said in a question-and-answer section.

©2021 Bloomberg L.P.