THE CHINA SECURITIES REGULATORY COMMISSION recently approved Xiaomi Group, an electronics manufacturer headquartered in Beijing and the world's fourth-largest smartphone producer, to issue shares in form of depository receipts, the first enterprise to do so in China's A-share market. Beijing News comments:

The China Securities Regulatory Commission has implemented a series of new regulations recently, encouraging qualified innovative enterprises to issue depository receipts, which are negotiable financial instruments issued by a bank to represent a company's securities. It facilitates buying shares of companies listed in overseas stock markets.

The depository receipts provide a fast track for overseas-listed Chinese companies, especially the giants in the IT industry, to issue securities in China's A-share market.

Giving the green light to the depository receipts and approving Xiaomi's application in a short time show the government's support for and attention to innovative enterprises.

Many innovative companies employ a structure, in which shares are classified into two categories: those held by the senior executives and founders and those that can be purchased by general investors, in the early stage of development to make use of equity financing while protecting the founders and senior management's control over the companies, which is the key to fast-growing startups.

The depository receipts system not only meets the expectations of the innovative enterprises with different rights of the same shares to return to the A-share stock market, but also adds important forces to the domestic supply side structural reform and avoids some difficult problems in the legal framework. Promoting the listing of innovative enterprises is conducive to improving the structure of the listed companies and speeding up the entry of foreign capital into the A-share market.

While tightening control and examination of the approval and application of initial public offerings, China's embracing of the depository receipts regulation, is a meaningful institutional innovation that does not require an overhaul of the current legal system and quickly opens a door of China's A-share market to Chinese companies listed overseas.