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The following content is translated from the Financial Times.

Recently, according to the Financial Times, Shein's London listing plan has attracted widespread attention and the UK Financial Conduct Authority (FCA) is facing strict scrutiny. Lawyers said that when weighing the approval of the plan, the FCA needs to balance the UK's reputation as a strong country in corporate governance and its attractiveness as a business destination.

The online fashion retailer, which was founded in 2008 and is now headquartered in Singapore, has recently submitted confidential documents to the FCA, indicating that its UK initial public offering (IPO)IPO) The plan is progressing.

Although Shein's latest round of financing valued it at $66 billion, its London listing will be a boon to the UK financial markets, but it may also bring reputational risks.

Alasdair Steele, head of equity capital markets at law firm CMS, said the FCA was “going to be very focused on getting the decision right”. He added: “In the process they will also be aware of the consequences of getting it wrong, whether that’s being criticised for listing an unsuitable company or being blamed for refusing to list an otherwise good company.”

Shein's decision to go public in London comes after it abandoned plans to list in New York this year. The reason behind this move is that the escalating tensions between China and the United States may affect the listing process.

Executive Chairman Donald Tang told the Financial Times that while the company awaits a decision on its IPO, it has launched a €200 million fund to tackle waste in the fashion industry in response to heightened scrutiny of environmental, social and governance (ESG) standards. The company is also exploring options for a Hong Kong listing.

Litigation lawyer Francesca Bagge of Stewarts said: “Shein’s announcement of a revolving fund is a positive step in demonstrating its commitment to the sustainable fashion industry. However, it does not meet or achieve any of the rigorous ESG standards that the UK will require of Shein when it floats.”

Shein said the fund was part of its "ongoing efforts to create a more sustainable and responsible fashion industry," adding that it would also support other initiatives such as using waste materials from other brands.

The number of listings in the City of London has fallen by about 40% since its peak in 2008. Between 2015 and 2020, the U.K. accounted for just 5% of global IPOs, according to data from the London Stock Exchange and Dealogic.

The FCA has broad responsibilities to protect listed companies from "investor harm" and to require them to disclose corporate governance.

However, lawyers said the FCA had no investigative or enforcement powers for breaches of legislation that fell outside its remit, such as the Modern Slavery Act or tax laws, and that it would be extremely rare for the FCA to refuse a listing based on investor harm.

“The FCA is in a bit of a bind because it is supposed to be more pragmatic and commercial, but equally we want to maintain our corporate governance standards,” said one equity capital markets lawyer, adding that Shein’s IPO “has important implications for how the FCA will act in the future”.

Before submitting a formal listing application to the FCA, a company will submit a qualification letter explaining why it is suitable for listing, and usually also a draft prospectus or other listing documents containing financial and other key information that investors need. These documents allow applicants to resolve relevant issues with the FCA before a formal listing request is made.

Lawyers said that when the FCA said the listing would not be successful, companies would often withdraw from the process and try to respond with statements such as "we have no immediate plans to list in London".

Andrew Gillen, corporate lawyer and senior partner at law firm Travers Smith, said: “If successful, a large, high-profile IPO of an international company such as Shein would provide a significant boost to the UK market. However, in assessing the company’s eligibility, the FCA must consider Shein’s ability to meet and continue to comply with the FCA’s corporate governance standards.”

FCA and Shein declined to comment on the potential listing.