The Holding Foreign Companies Accountable Act is a 2020 law that requires companies publicly listed on stock exchanges in the United States to disclose to the United States Securities and Exchange Commission information on foreign jurisdictions that prevent the Public Company Accounting Oversight Board (PCAOB) from conducting inspections. Under the law, such companies will be banned from trading and delisted from exchanges if the PCAOB is not able to audit specified reports for three consecutive years.[1] The bill requires such companies to declare they are not owned or controlled by the Chinese government.[2]
Holding Foreign Companies Accountable Act
Long title
An Act to amend the Sarbanes-Oxley Act of 2002 to require certain issuers to disclose to the Securities and Exchange Commission information regarding foreign jurisdictions that prevent the Public Company Accounting Oversight Board from performing inspections under that Act, and for other purposes.
In 2019, a similar bill titled the EQUITABLE Act was introduced by Senator Marco Rubio (R-FL) in the United States Senate over concerns certain foreign companies were non-compliant with oversight and audit rules on American stock exchanges. This was in response to the lack of compliance and transparency among Chinese companies listed on US exchanges, thereby increasing the risk of defrauding investors.[3]
The consideration of the Holding Foreign Companies Accountable Act in Congress coincided with the high-profile financial scandal involving Chinese coffee chain Luckin Coffee, which fired both its CEO and COO in May 2020 for accounting fraud concerning the intentional fabrication of around $310 million in sales in 2019. This subsequently resulted in Luckin's shares plunging by around 80%.[4] Luckin also received a delisting notice from the Nasdaq stock exchange on May 19, 2020.[5] On June 26, it was confirmed that Luckin would be delisted from the Nasdaq and Luckin's stock saw its last day of trading.[6]
Legislative historyedit
On May 20, 2020, the bill passed the United States Senate by unanimous consent.[7] On December 2, 2020, the bill passed the United States House of Representatives by unanimous voice vote.[8] The bill was signed into law by President Donald Trump on December 18, 2020.[9]
Implicationsedit
As required by the bill, the SEC started publishing in March 2022 a provisional list of foreign issuers that the PCAOB is unable to audit.[10] Days later on 2 April, China Securities Regulatory Commission announced a proposed removal to a requirement that on-site inspections of Chinese companies with foreign listings can only be conducted by Chinese regulatory agencies.[11]
Referencesedit
^Thomas Franck (21 May 2020). "Bill to delist Chinese stocks moving at 'warp speed' as a crackdown gains bipartisan support". CNBC. Retrieved 13 June 2020.
^Chris Matthews (20 May 2020). "Senate passes bill that could delist Chinese companies from U.S. stock exchanges". MarketWatch. Retrieved 13 June 2020.
^Robertson, Benjamin (June 6, 2019). "Latest U.S. Salvo Against Chinese Firms Could Benefit Hong Kong". Bloomberg News. from the original on July 2, 2019. Retrieved September 24, 2019.
^Dan Primack (12 May 2020). "Luckin Coffee fires CEO and COO for fraud". Axios. Retrieved 15 June 2020.
^Dan Primack (20 May 2020). "Luckin Coffee faces Nasdaq delisting following alleged fraud". Axios. Retrieved 15 June 2020.
^Tonya Garcia (26 June 2020). "Luckin Coffee to be delisted from the Nasdaq". MarketWatch. Retrieved 27 June 2020.
^Matthews, Chris. "Senate passes bill that could delist Chinese companies from U.S. stock exchanges". MarketWatch. Retrieved 2020-12-03.
^Zengerle, Patricia (2020-12-03). "Chinese firms on U.S. exchanges threatened by bill headed to Trump's desk". Reuters. Retrieved 2020-12-03.
^"Trump signs bill that could kick Chinese firms off U.S. stock exchanges". Reuters. 2020-12-18. Retrieved 2020-12-19.
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The Holding Foreign Companies Accountable Act is a 2020 law that requires companies publicly listed on stock exchanges in the United States to disclose to the United States Securities and Exchange Commission information on foreign jurisdictions that prevent the Public Company Accounting Oversight Board PCAOB from conducting inspections Under the law such companies will be banned from trading and delisted from exchanges if the PCAOB is not able to audit specified reports for three consecutive years 1 The bill requires such companies to declare they are not owned or controlled by the Chinese government 2 Holding Foreign Companies Accountable ActLong titleAn Act to amend the Sarbanes Oxley Act of 2002 to require certain issuers to disclose to the Securities and Exchange Commission information regarding foreign jurisdictions that prevent the Public Company Accounting Oversight Board from performing inspections under that Act and for other purposes Enacted bythe 116th United States CongressLegislative historyIntroduced in the Senate as S 945 by John Kennedy R LA on March 28 2019Committee consideration by United States Senate Committee on Banking Housing and Urban AffairsPassed the Senate on May 20 2020 Unanimous consent Passed the House on December 2 2020 Unanimous voice vote Signed into law by President Donald Trump on December 18 2020 Contents 1 Background 2 Legislative history 3 Implications 4 References 5 External linksBackground editIn 2019 a similar bill titled the EQUITABLE Act was introduced by Senator Marco Rubio R FL in the United States Senate over concerns certain foreign companies were non compliant with oversight and audit rules on American stock exchanges This was in response to the lack of compliance and transparency among Chinese companies listed on US exchanges thereby increasing the risk of defrauding investors 3 The consideration of the Holding Foreign Companies Accountable Act in Congress coincided with the high profile financial scandal involving Chinese coffee chain Luckin Coffee which fired both its CEO and COO in May 2020 for accounting fraud concerning the intentional fabrication of around 310 million in sales in 2019 This subsequently resulted in Luckin s shares plunging by around 80 4 Luckin also received a delisting notice from the Nasdaq stock exchange on May 19 2020 5 On June 26 it was confirmed that Luckin would be delisted from the Nasdaq and Luckin s stock saw its last day of trading 6 Legislative history editOn May 20 2020 the bill passed the United States Senate by unanimous consent 7 On December 2 2020 the bill passed the United States House of Representatives by unanimous voice vote 8 The bill was signed into law by President Donald Trump on December 18 2020 9 Implications editAs required by the bill the SEC started publishing in March 2022 a provisional list of foreign issuers that the PCAOB is unable to audit 10 Days later on 2 April China Securities Regulatory Commission announced a proposed removal to a requirement that on site inspections of Chinese companies with foreign listings can only be conducted by Chinese regulatory agencies 11 References edit Thomas Franck 21 May 2020 Bill to delist Chinese stocks moving at warp speed as a crackdown gains bipartisan support CNBC Retrieved 13 June 2020 Chris Matthews 20 May 2020 Senate passes bill that could delist Chinese companies from U S stock exchanges MarketWatch Retrieved 13 June 2020 Robertson Benjamin June 6 2019 Latest U S Salvo Against Chinese Firms Could Benefit Hong Kong Bloomberg News Archived from the original on July 2 2019 Retrieved September 24 2019 Dan Primack 12 May 2020 Luckin Coffee fires CEO and COO for fraud Axios Retrieved 15 June 2020 Dan Primack 20 May 2020 Luckin Coffee faces Nasdaq delisting following alleged fraud Axios Retrieved 15 June 2020 Tonya Garcia 26 June 2020 Luckin Coffee to be delisted from the Nasdaq MarketWatch Retrieved 27 June 2020 Matthews Chris Senate passes bill that could delist Chinese companies from U S stock exchanges MarketWatch Retrieved 2020 12 03 Zengerle Patricia 2020 12 03 Chinese firms on U S exchanges threatened by bill headed to Trump s desk Reuters Retrieved 2020 12 03 Trump signs bill that could kick Chinese firms off U S stock exchanges Reuters 2020 12 18 Retrieved 2020 12 19 Holding Foreign Companies Accountable Act U S Securities and Exchange Commission 2022 03 30 Retrieved 2022 04 04 关于就 关于加强境内企业境外发行证券和上市相关保密和档案管理工作的规定 公开征求意见的通知 in Chinese China Securities Regulatory Commission 2022 04 02 Retrieved 2022 04 04 External links editS 945 Senate bill text Retrieved from https en wikipedia org w index php title Holding Foreign Companies Accountable Act amp oldid 1199159266, wikipedia, wiki, book, books, library,
