A number of shareholders in Hon Hai Precision Industry Co (鴻海精密) were disappointed to learn that they must overcome many hurdles to participate in the initial public offering (IPO) of the company’s Internet-focused subsidiary in China.
Foxconn Industrial Internet Co (FII, 富士康工業互聯), a Shenzhen-based subsidiary manufacturing electronic devices, cloud service equipment and industrial robots, might make its debut on the Shanghai Stock Exchange by the end of this month after obtaining swift approval for its IPO application from the China Securities Regulatory Commission last week.
However, Taiwanese investors — looking to tap into gains from the high-profile IPO by drawing lots for the right to purchase FII shares — would have to be able to meet the same customer verification requirements as their Chinese peers, said Grand Fortune Securities Co Ltd (福邦證券), which handles relations with local retail investors for Hon Hai.
Taiwanese investors are required to have an account at a Chinese securities brokerage and bank, as well as a Chinese mobile phone number and a Chinese residency permit, Grand Fortune said yesterday, adding that these can only be set up in person and in China.
In addition, Taiwanese investors must be ready to supply their Taiwanese identification card and their so-called “Taiwan compatriot travel documents” (台胞證).
Most notably, insurers are required to hold a minimum of 10,000 yuan in Shanghai A-shares in the two days leading up to the drawing of lots, the stock affairs agency said, noting that the holding requirement is calculated based on the shares’ average market value over the past 20 trading sessions.
Grand Fortune made the remarks at a briefing in Taipei, but because the presentation was carried out under tight security, several Hon Hai shareholders who did not register during an extraordinary general meeting in January were turned away.
Hon Hai chairman Terry Gou (郭台銘) in January promised to assist eligible shareholders who wished to participate in FII’s IPO, but many retail investors said that they were discouraged by the tough process ahead, local Chinese-language media reported yesterday.
The investors’ difficulties are made worse by additional limits imposed by cross-strait regulations, including tax and anti-money laundering rules, the reports said.
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