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Could new SEC rules prevent Chinese companies from listing in the US? The Foreign Ministry responded: firmly opposed

via:观察者网     time:2021/12/3 22:00:29     readed:200

According to the website of the Foreign Ministry, Foreign Ministry spokesperson Zhao Lijian held a regular press conference on December 3, 2021.

Question: ON Thursday, the U.S. market regulator approved a rule that allows it to delist foreign companies from Wall Street exchanges if they are unable to provide information to auditors. That could deter Chinese companies from listing in the United States. How do you respond to that?

Zhao Lijian: The relevant action of the US side is another concrete action of political repression against Chinese companies. It is also another concrete manifestation of the US side's suppression and containment of China's development. We are firmly opposed to this. China always believes that in today's highly globalized capital market, the right way to solve the problem is for relevant parties to strengthen dialogue and cooperation on issues such as strengthening cross-border regulatory cooperation and protecting the legitimate rights and interests of investors. Politicizing securities regulation to harm others will cost American investors the opportunity to invest in many of the world's fastest growing companies and will cost American professional services firms many business opportunities. The US should clearly understand the situation and provide a fair, just and non-discriminatory environment for foreign companies to invest and operate in the US instead of erecting obstacles. China will take necessary measures to safeguard its legitimate rights and interests.

Image from Ministry of Foreign Affairs website

The US Securities and Exchange Commission (SEC) announced on Tuesday (local time) that it has passed an amendment to the Foreign Company Accountability Act (HFCAA), which will improve the rules for submission and disclosure of information.

The new rules are designed to ensure that foreign companies listed in the United States follow U.S. rules, according to information posted on its website. "The final rule will make it easy for investors to identify registrants whose audit firms are located in foreign jurisdictions that cannot be fully examined by the PCAOB. In addition, foreign issuers will be required to disclose the level of foreign government ownership of these entities."

'There is a fundamental agreement in our securities system -- the Sarbanes-Oxley Act of 2002 -- that if you want to list in the U.S., the companies that audit your books must be inspected by the PCAOB,' SEC Chairman Gary Gensler said in a statement. "The SEC and THE PCAOB will continue to work together to ensure that auditors of foreign companies entering the U.S. capital markets comply with our rules."

Under the new rules, the SEC will require foreign companies listed in the U.S. to disclose whether they are owned or controlled by a government entity and provide evidence of audit checks, while companies listed as variable interest entities (vies) will need to further strengthen disclosure. The law allows the SEC to ban trading or even delist a listed company's stock if the PCAOB fails to obtain the required audit papers within the specified period or if the company fails to promptly declare whether it is owned and controlled by a foreign government.

The rules specify that overseas companies that are required to comply will have 15 days to file a judicial appeal with the SEC, which can delist companies that do not comply with the rules for up to three years.

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