The UK is bending its audit rules to lure Chinese companies into listing in London
The Financial Reporting Council (FRC) has launched a consultation on a temporary tweak to its rules for third-country auditors (TCAs), which could make it easier for Chinese companies to list in London.
Announced on Tuesday (16 February), the proposal would allow auditors of Chinese-registered entities issuing Global Depositary Receipts (GDRs) on the London Stock Exchange to apply Chinese Standards on Auditing (CSAs) for UK listing purposes, temporarily relaxing the usual requirement to use standards aligned with UK or international norms.
The move follows a direct request from the UK Government, which views current audit rules as a perceived barrier deterring some Chinese issuers from choosing London as a listing venue.
The FRC said the change is designed to encourage eligible Chinese companies to list via the Shanghai/Shenzhen Stock Connect link-up between the Financial Conduct Authority and the China Securities Regulatory Commission.
“This temporary amendment aims to support the flow of capital, enabling investment and growth,” the FRC stated, while emphasising it is narrowly scoped: it applies only to listings in the identifiable Stock Connect segment of the LSE’s International Order Book. It does not affect other Chinese-registered issuers or the wider TCA regime.
Other safeguards also remain in place. Auditors must still register with the FRC as TCAs, face ongoing supervision, and ensure clear disclosures about the auditing standards used to protect investor transparency and market integrity.
The regulator is now seeking views on whether the plan strikes the right balance between maintaining audit quality and investor protection on one hand, and boosting UK economic growth and London’s position as a global financial centre on the other.
The consultation follows broader government efforts to revitalise the London market amid fierce competition from New York and other hubs. Critics may see the adjustment as London “bending” its audit standards to lure Chinese listings, but the FRC insists the time-limited nature and built-in protections prevent any dilution of core oversight.
