Two departments including the Ministry of Finance ("MOF") have recently issued the Circular on Matters Concerning Accrediting British Accounting Firms to Engage in the Audit Business Relating to Chinese Depository Receipts under the Shanghai-London Stock Connect (the "Circular").
The Circular states that, British accounting firms shall fulfill three requirements, including "being approved to conduct securities-related audit business in Britain and having over five-year experience of securities-related audit business", if they intend to apply for conducting business related to the Shanghai-London Stock Connect. The Circular also reads that where the information of an accredited British accounting firm changes before the maturity of Chinese Depository Receipts (CDRs), it shall, within five working days after the occurrence of such change, fill out the Reporting Form for Engagement of British Accounting Firms in Audit Business Relating to CDRs under the Shanghai-London Stock Connect, to report on the information change. Moreover, the Circular emphasizes that in case of failure to go through the reporting formalities in line with the provisions of this Circular or submission of untruthful reporting materials, the MOF and the CSRC will order it to make rectification within the prescribed time limit; and if it fails to do so, it will be disqualified if it has been accredited and the disqualification will be publicly announced, or it will not be accredited if it has not yet been accredited and be labeled as a closely-watched target.