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December 20, 2010

China selects Mainland firms for H-share licenses

The Chinese Ministry of Finance (MoF) has chosen 12 mainland accounting firms to receive a coveted H-share license after a successful a pilot programme.

The MoF’s decision comes after Hong Kong Exchanges and Clearing Limited, operator of the local stock exchange, agreed to allow Mainland firms to sign off audits of Chinese incorporated companies also listed on the Hong Kong Stock Exchange from 15 December.

Firms selected to receive a H-share license are: BDO Shu Lun Pan, BDO China Li Xin Da Hua, Crowe Horwath China, Daxin Certified Public Accountants – a PKF International member firm, Deloitte, Ernst & Young, Grant Thornton China, KPMG, Pan-China CPA, PwC, RSM China and ShineWing.

In the past, two separate sets of accounts and two separate auditors have been required, one for each jurisdiction.

“For companies already listed in both mainland China and Hong Kong, this long awaited move will mean they no longer have to prepare two separate sets of accounts or pay audit fees twice over,” Grant Thornton China chief executive Xu Hua said.

“Chinese companies seeking a listing will benefit from a wider choice of auditor. And as more Chinese companies seek to raise finance from the capital markets through IPOs, we believe this new system will make it easier for Chinese companies to list in Hong Kong.”

Mainland firms have been forging closer ties with the Hong Kong network partners for some time. The move to allow Mainland firms to audit H-share clients will provide greater competition to Hong Kong firms and should encourage even greater consolidation in the market.

 

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