Bill forcing Chinese organizations to meet up US accounting standards passes Congress
03 December, 2020
The US Home of Representatives passed legislation on Wednesday (Dec 2) that could prevent Chinese companies from listing their shares on US exchanges unless they adhere to US auditing standards.
The measure passed by unanimous voice vote, after passing the Senate earlier this season, sending it to the White Property which said President Donald Trump is expected to sign it into regulation.
The Holding Foreign Corporations Accountable Act bars securities of foreign companies from being listed on any US exchange if indeed they have failed to comply with the US Public Accounting Oversight Board's audits for 3 years in a row.
While it pertains to corporations from any country, the legislation targets Chinese companies such as for example Alibaba, tech company Pinduoduo and oil giant PetroChina.
Measures going for a harder range on Chinese business and trade procedures generally pass Congress with large margins, as both Democrats and Trump's fellow Republicans echo the president's hard series against Beijing.
Democratic Senator Chris Van Hollen, who co-authored the bill with Republican Senator John Kennedy, said in a statement that American investors "have already been cheated away of their money just after investing in seemingly-legitimate Chinese companies that are not kept to the same standards as different publicly listed companies".
Kennedy said China was first working with U.S. exchanges to "exploit" Americans. "THE HOME joined the Senate in rejecting a toxic position quo," he said in a statement.
The act would additionally require public companies to reveal if they are owned or controlled by a foreign government.
Greater scrutiny may possibly also deter different Chinese firms from listing in America, say market participants. Such listings reached a six-year huge this year.
INTERNATIONAL DISAGREEMENTS
Chinese foreign ministry spokeswoman Hua Chunying said before the vote that it had been a discriminatory policy that politically oppresses Chinese organizations.
"Instead of establishing layers of barriers, we trust the US provides a good and non-discriminatory environment for foreign companies to get and operate in the US," Hua told a reports conference.
Chinese authorities have always been reluctant to let abroad regulators inspect regional accounting firms, citing countrywide security concerns.
Officials at China's securities regulator indicated earlier this year they were ready to allow inspections of audit papers in some circumstances, but past agreements targeted at solving the dispute have got didn't work in practice.
Shaun Wu, a Hong Kong-based spouse at law firm Paul Hastings, said increased enforcement against Chinese corporations was likely despite the fact that Democrat Joe Biden can be president in January.
He said that if the expenses becomes legislation, "all Chinese companies listed found in the U.S. will face increased scrutiny by the US authorities and inevitably consider all available choices".
This may include listing in Hong Kong or elsewhere, he said. Many U.S.-detailed Chinese organizations, including Alibaba and KFC China operator Yum China, have recently completed secondary listings on Hong Kong.
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