China said domestic firms must gain approval before they can list overseas if they operate in areas deemed off-limits to foreign investors, closing a loophole for the country’s tech groups to raise capital in the US without going through regulatory scrutiny at home.

The National Development and Reform Commission, the state’s economic planning agency, said on Monday that local businesses in sectors with restrictions on foreign investment must now obtain clearance from “relevant” government departments before proceeding with overseas initial public offerings.

The regulator also said that foreign investors would face a 30 per cent cap on their holdings of such Chinese companies when listing, and they would also be banned from operating and managing them.