US Congress passes bill to delist deceitful Chinese companies from American stock markets

Washington: The US Congress has passed a bill that prohibits companies from being listed on American stock markets if they fail to provide the regulators access to their audit information for three years in a row, paving the way to delist deceitful Chinese companies from the US securities exchanges.
The bipartisan Holding Foreign Companies Accountable Act will help protect American investors and their retirement savings from foreign companies that have been operating on US stock exchanges while flouting oversight.
The bill was passed by the House of Representatives on Wednesday. It was passed by the Senate on May 20. The bill now heads to the White House for President Donald Trump to sign it into law.
The bill prohibits securities of a company from being listed on any of the US securities exchanges if the company has failed to comply with Public Company Accounting Oversight Board (PCAOB) audits for three years in a row.
It requires public companies to disclose whether they are owned or controlled by a foreign government, including China’s communist government; and ensures foreign companies traded in America are subject to the same independent audit requirements that apply to American companies.
The Trump administration has passed a series of measures aimed at severing the economic ties between the US and China. US-China ties have deteriorated sharply over issues ranging from trade, the coronavirus pandemic and telecoms-gear maker Huawei to China’s territorial claims in the South China Sea and its clampdown on Hong Kong.
There is no reason to let Communist China game the system and put American investments in jeopardy. Our bill protects our constituents’ hard-earned money and shines a light on China’s nefarious actions. I am glad the House supported it and look forward to President (Donald) Trump signing it, Senator Kevin Cramer said.
This may be the most significant piece of investor protection legislation passed in several years, said Congressman Brad Sherman, Chair of the Investor Protection and Capital Markets subcommittee.
It is designed to assure Financial Statement integrity of 224 US-limited companies with over USD 1.8 trillion in market capitalisation. The purpose is not to de-list any company, but to persuade China to allow the audit oversight that US investors need, and the US investors get when investing in US companies or companies in over 50 foreign jurisdictions, he said.
Currently, the Public Company Accounting Oversight Board is unable to inspect the audit work and practices of PCAOB-registered audit firms in a handful of foreign jurisdictions, primarily China.
In most cases, audit firms in those foreign countries cite local laws related to data protection, privacy, confidentiality, or national security as the reason for being unable to provide the PCAOB with the information they need to complete their inspections.
According to PCAOB, accounting firms which are unable to provide information necessary for effective oversight currently serve as the principal auditor for 224 US-listed companies which have a combined total of USD 1.8 trillion in market capitalisation.
The Holding Foreign Companies Accountable Act will protect investors and enforce a level playing field between US and foreign companies by requiring companies which go three years without the appropriate PCAOB audit inspection to be delisted from US exchanges.

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