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Friday, January 21, 2022

US regulator enforces pressure on China for further company information disclosure, threatening removal from stock markets

The US Securities and Exchange Commission (SEC) has enforced increasing pressure on China to disclose further information about Chinese companies’ audits and whether they are controlled by a Government.

Failure to comply with the demand would force these companies out of the US stock markets under a rule approved by the SEC.

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According to the SEC, companies that use an auditor in a foreign jurisdiction must confirm that they are not controlled by any Government entity in the jurisdiction where operations are being carried out.

Companies will be required to disclose additional information in annual reports while trading prohibitions can be imposed on certain companies.

While other companies cooperate with the US Public Companies Accounting Oversight Board (PCAOB) to prevent false reporting, Beijing refuses the Board to review the work of Chinese auditors, citing security concerns.

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This rule applies to audit firms that the PCAOB is unable to inspect or investigate.

Meanwhile, the US Government has banned Americans from investing in the stocks, bonds and other securities of Chinese companies that are suspected to be linked to the ruling Communist Party’s efforts to upgrade its military technology.

IMAGE – “Joe Biden” by Gage Skidmore is licensed under CC BY-SA 2.0/Wikimedia Commons

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