The Chinese reverse merger companies (RMCs) reassessed: promising but challenging?

Bu, Qingxiu (2013) The Chinese reverse merger companies (RMCs) reassessed: promising but challenging? Journal of International Business and Law, 12. pp. 17-38. ISSN 2151-7649

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Abstract

A reverse merger is perceived to be a quicker and less expensive method of going public than a traditional underwritten initial public offering, which many Chinese companies have used to gain access to United States (“U.S.”) capital markets. A string of fraud allegations involving U.S.-listed Chinese reverse merger companies (RMCs) has unearthed numerous regulatory loopholes, challenging the efficacy of the Securities and Exchange Commission’s (“SEC”) supervision. This surge of securities lawsuits has come to exemplify investor concerns with RMCs’ accounting, audits and controls. The focus should have been put on developing an effective cross-border audit oversight system to ensure integrity and investor protection. The ostensible sovereignty issue and China’s vague State Secrets Law have stifled hopes of reaching an agreement on the joint inspection between the two jurisdictions. The unreliability of the judicial remedies at the current stage protrudes the imminence for the SEC and the Exchanges to impose more stringent listing standards, which may be the only realistic measures that can be taken to restore the investors’ confidence.

Item Type: Article
Schools and Departments: School of Law, Politics and Sociology > Law
Subjects: K Law > K Law in General. Comparative and uniform Law. Jurisprudence > K0520 Comparative law. International uniform law > K1000 Commercial law
K Law > KZ Law of Nations
Depositing User: Qingxiu Bu
Date Deposited: 12 Jun 2013 09:10
Last Modified: 25 Sep 2013 13:35
URI: http://sro.sussex.ac.uk/id/eprint/45363
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