A CHINESE business that is planning to float in London next month believes that it has successfully circumvented the recent crackdown by Beijing on overseas listings.

China Medstar, which operates cancer clinics in 13 Chinese hospitals, said that its legal advice was that it was exempt from the more onerous regime announced last month because it was already registered outside China.

China Medstar restructured three years ago, shifting its registered office to Singapore, making it a so-called WFOE — or wholly foreign-owned enterprise.

David Thomas, a non-executive director and chairman of China Shoto, another London-listed Chinese company, said that WFOEs appeared to be exempt from the new rules, although the board is seeking final clarification this week.

On September 8 China stunned the business community by introducing Ordinance 10, re-establishing restrictions that had been repealed three years ago and obliging Chinese companies to seek government approval before listing overseas. The curb is expected to halt or slow the flood of overseas flotations.

Beijing has become concerned that it is losing tax revenues because of the favourable treatment of overseas-listed companies and that state-owned companies have been sold too cheaply to foreigners. A record 19 Chinese companies have listed in London this year, bringing the total to 43, including Air China and the construction group Zhejiang Expressway.

China Medstar is raising around £10 million to finance more clinics. It aims to have 40 by the end of next year. It expects dealings to begin on AIM in November.

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