The PRC Law on Securities ("Securities Law") and relevant laws and regulations strictly prohibit the unauthorized issuance of shares to the public (the issuance of shares either to non-specified persons or to specified persons which results in the issuer having more than 200 shareholders). In practice, the China Securities Regulatory Commission ("CSRC") is intently focused on whether the number of shareholders exceeds 200 upon applying certain shareholder "look-through" rules. In general, "look-through" means to examine the upstream shareholding structure of companies or the subscription structure of private equity "PE") funds or asset management plans to determine the ultimate natural person, listed company or State-owned Assets Supervision and Administration Commission ("SASAC") investors. The scope of the look-through rules is an important factor that affects the 200 shareholder threshold determination, although this concept continues to be ambiguous. By analyzing the relevant laws, regulations and cases, this article discusses the scope of look-through in determining the number of shareholders in different types of capital market transactions, including IPOs, backdoor listings, asset purchases through share issuances (not constituting a backdoor listing), cash subscriptions for private share placements of A-share listed companies, public issuances of A-share listed companies (share allotments, additional share issuances), NEEQ listings and the private placements of NEEQ listed companies.
