BEIJING, Dec 28 (AFP) — Beijing has tightened the rules on overseas listings by Chinese firms in a series of new regulations that increase scrutiny of companies seeking to raise funds on foreign stock markets.

China has stepped up scrutiny of major overseas listings after a controversial New York IPO by ride-hailing giant Didi Chuxing went ahead this year, despite regulatory concerns at home.

In the latest measure to increase oversight, authorities said Monday that companies in industries where foreign investment is banned — due to a “negative list” — will have to seek approval from authorities for an overseas debut.

Overseas investors’ total ownership will be capped at 30 percent while a single investor should hold no more than 10 percent, according to the updated list of restrictions on foreign ownership taking effect from January.

Foreign investors are also “not allowed to participate in the operations and management” of the company, a joint statement by the commerce ministry and National Development and Reform Commission said.

It came days after authorities proposed that companies seeking foreign IPOs would need to register with the securities regulator.

The listing will be blocked if it could be considered to constitute a threat to national security.

Some of China’s biggest firms have listed on US stock markets in search of more developed markets and fresh lines of cash from a massive investor base, but enthusiasm has wavered amid soaring tensions between Beijing and Washington.

Beijing has also launched a wide-ranging regulatory crackdown over the last year to curb runaway growth in China’s powerful internet sector and rein in the influence of big businesses.

In the wake of Didi’s New York listing, authorities shocked investors by launching investigations into the company over cybersecurity — before they ordered it be removed from app stores, and extended probes into other US-listed Chinese companies.

Didi said this month it would delist from the New York Stock Exchange, shortly after US regulators adopted a rule that would allow them to remove foreign firms.

China’s government has been encouraging companies to list on domestic exchanges instead, to protect information and data heading overseas and develop the country’s capital markets.

The latest regulatory moves stop short of a ban on offshore structures known as variable interest entities (VIE) — structures which allowed tech giants like Alibaba and Tencent to avoid restrictions on foreign investment and listings abroad in recent decades.

But the restrictions will make VIE structures “less attractive” as well as “making foreign listings less appealing for Chinese founders and investors,” University of Hong Kong law professor Angela Zhang told AFP.

The rule will not affect companies already listed overseas.

Regulators also earlier suggested that companies with at least a million users undergo a cybersecurity review before going public abroad.