New York CNN Business  — 

The Securities and Exchange Commission has told its staff to ask for more disclosures from Chinese companies seeking to go public in the United States before it will approve any plans for them to sell shares.

The announcement Friday, first reported by Reuters, shows regulators are taking a much more cautious stance on Chinese companies looking to sell shares in America following the disastrous meltdown of ridesharing giant Didi Global.

Shortly after Didi went public on the New York Stock Exchange on June 30, Beijing cracked down on the company due to concerns about its cybersecurity practices.

Didi’s stock has plunged more than 30% from its initial public offering price of $14 a share, and is trading at nearly half the peak of above $18 that it hit on its IPO day.

China’s scrutiny on the company is part of a wider push by the government to exert more control over its homegrown tech giants, many of whom have chosen to go public in New York instead of Hong Kong or Shanghai.

The US-listed shares of Alibaba (BABA), its e-commerce rival JD (JD), social media giant Tencent (TCEHY), search engine Baidu (BIDU) and electric car company Nio (NIO) have all tumbled between 10% and 20% in the past month on concerns about even stricter regulations from China, and potentially the US as well.

“In light of the recent developments in China…I have asked staff to seek certain disclosures from offshore issuers associated with China based operating companies before their registration statements will be declared effective,” said SEC chair Gary Gensler in a statement.

The SEC is specifically concerned about Chinese companies that are structured as so-called Variable Interest Entities (VIEs). Although they’re based in China, these companies are set up as an offshore shell company — often in tax-friendly places like the Cayman Islands — to issue stock.

In addition to lower taxes, companies registering their businesses outside of China typically have been able to get speedier approval from regulators in the US for IPOs.

But Gensler said he wants these companies to disclose more information explaining that investors are not directly buying shares of a company headquartered in China, as well as more details about the relationship between the shell company and the parent firm.

He’s also looking for more disclosure about the risks these companies face as a result of any regulatory changes made by the Chinese government in the future and wants the companies to include more detailed financial information.

Gensler also said Friday that he has asked SEC staffers “to engage in targeted additional reviews of filings for companies with significant China-based operations.”

“I believe these changes will enhance the overall quality of disclosure in registration statements of offshore issuers that have affiliations with China-based operating companies,” Gensler said.

Following the statement, the China Securities Regulatory Commission (CSRC) on Sunday called for Beijing and Washington to “enhance communication” on how Chinese companies should be regulated.

Regulators from both countries should “properly address issues related to the supervision of China-based companies listed in the United States, so as to form stable policy expectations and create a good regulatory environment,” the CSRC said.

The agency also sought to quell concerns about Beijing’s crackdown on Chinese firms, which have spooked investors and led last week to a massive stock market sell-off.

The CSRC has “always been open to companies’ choices to list their securities on international or domestic markets,” it said in its statement, adding that it will communicate closely with other authorities in China to stay transparent about policy affecting such companies.

– Laura He contributed to this report.