WASHINGTON: The top US stock regulator responded today to Beijing’s crackdown on big business by announcing new reporting requirements for Chinese shell companies listed on American exchanges.

The announcement comes in the wake of Beijing’s recent steps to tighten the leash on major corporations in entertainment, ride-hailing, education and online shopping, including cybersecurity checks on firms planning to raise money in foreign markets.

In a move he said was aimed at protecting American investors, Gary Gensler, head of the Securities and Exchange Commission (SEC), called for new disclosures including to “prominently and clearly” state whether they have permission to list overseas.

The requirements focus on offshore shell companies known as Variable Interest Entities (VIEs).

“I worry that average investors may not realise that they hold stock in a shell company rather than a China-based operating company,” Gensler said in a statement. 

“In light of the recent developments in China and the overall risks with the China-based VIE structure, I have asked staff to seek certain disclosures from offshore issuers associated with China-based operating companies.”

He also said he asked SEC staff for “targeted additional reviews of filings for companies with significant China-based operations”, but gave no details on how those would be determined.

China’s new rules have roiled markets in recent days and caused some firms to shelve plans for initial stock offerings.

Ride-hailing giant Didi Chuxing defied authorities and went ahead with its initial public offering only to face a backlash when Beijing ordered the app to be removed from stores over cybersecurity concerns.