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Accelerate delisting of Chinese companies from American exchanges: Top US regulator

SEC chairman wants to see Chinese companies listed in US become compliant within 2 years or leave

Flag of the U.S. Securities and Exchange Commission.

Flag of the U.S. Securities and Exchange Commission. (Wikimedia Commons photo)

TAIPEI (Taiwan News) — The Chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, expressed support in Congress on Tuesday (Sept. 14) for reducing the timeframe Chinese companies have to reach auditing compliance if they are listed on U.S. exchanges.

Gensler told the Senate Committee on Banking, Housing and Urban Affairs that his agency was in direct talks with Chinese regulators, according to the South China Morning Post (SCMP).

His remarks coincided with a push for a bill, the Accelerating Holding Foreign Companies Accountable Act, that would cut the time American-listed Chinese companies have to submit to a full accounting by U.S. regulators. There are about 270 China-related companies that would be affected by the legislation, including shell entities registered in the Cayman Islands and elsewhere.

The U.S. Congress passed the Holding Foreign Companies Accountable Act last year, which requires all non-American companies to become SEC compliant within a three-year time frame or depart U.S. capital markets. The new bill, which has passed in the Senate but is reportedly struggling to get a vote in the House, would cut the time down to two years.

One of the bill’s sponsors, Senator John Kennedy, said he was “having a little trouble getting the House to take it up” and enlisted Gensler in the effort to help get the bill voted on, per SCMP.

Recently, a cascade of interventions by the Chinese Communist Party into the technology sector has slashed the value of a handful of Chinese companies traded publicly in the U.S. and impacted American investors. This has led to a pause on Chinese IPOs and increased pressure on the U.S. government to shorten the window for the already-listed companies to come into compliance.

Since the passage of the Sarbanes-Oxley Act of 2002, it has been required that companies seeking to issue public stock on U.S. exchanges have their audits inspected. The only places from which companies had been allowed to list in the U.S. without complying had been China and Hong Kong, both of which continue to cite national security concerns to prohibit foreign audits of their domestic audits.

Updated : 2021-10-20 16:18 GMT+08:00