Washington:
The US House of Representatives passed a law to kick Chinese providers off U.S. stock exchanges if they do not totally comply with the country’s auditing guidelines, providing President Donald Trump one particular much more tool to threaten Beijing with ahead of leaving workplace.
The measure passed the House by unanimous voice vote, just after passing the Senate unanimously in May, sending it to Trump, who the White House stated is anticipated to sign it into law.
“The Holding Foreign Companies Accountable Act” bars securities of foreign providers from getting listed on any U.S. exchange if they have failed to comply with the U.S. Public Accounting Oversight Board’s audits for 3 years in a row.
While is applies to providers from any nation, the legislation’s sponsors intended it to target Chinese providers listed in the United States, such as Alibaba, tech firm Pinduoduo Inc and oil giant PetroChina Co Ltd..
Measures taking a tougher line on Chinese small business and trade practices typically pass Congress with substantial margins. Both Democrats and Trump’s fellow Republicans echo the president’s difficult line against Beijing, which became fiercer this year as Trump blamed China for the coronavirus ravaging the United States.
Democratic Senator Chris Van Hollen, who co-authored the bill with Republican Senator John Kennedy, stated in a statement that American investors “have been cheated out of their money after investing in seemingly-legitimate Chinese companies that are not held to the same standards as other publicly listed companies.”
Kennedy stated China was utilizing U.S. exchanges to “exploit” Americans. “The House joined the Senate in rejecting a toxic status quo,” he stated in a statement.
The act would also need public providers to disclose whether or not they are owned or controlled by a foreign government.
The American Securities Association praised passage of the bill saying it was needed to safeguard Americans from “fradulent companies controlled by the Chinese Communist Party.”
‘NON-DISCRIMINATORY ENVIRONMENT’
The Chinese embassy in Washington did not quickly respond to a request for comment. Chinese foreign ministry spokeswoman Hua Chunying stated ahead of the vote that it was a discriminatory policy that politically oppresses Chinese firms.
“Instead of setting up layers of barriers, we hope the U.S. can provide a fair and non-discriminatory environment for foreign firms to invest and operate in the U.S.,” Hua told a news conference.
A spokesman for Alibaba pointed to a comment on the bill from May, when it was passed by the Senate. Chief Financial Officer Maggie Wu told investors the firm would “endeavor to comply with any legislation whose aim is to protect and bring transparency to investors who buy securities on U.S. stock exchanges.”
Chinese authorities have lengthy been reluctant to let overseas regulators inspect nearby accounting firms, citing national safety issues.
Officials at China’s securities regulator indicated earlier this year they have been prepared to permit inspections of audit documents in some situations, but previous agreements aimed at solving the dispute have failed to function in practice.
Shaun Wu, a Hong Kong-primarily based companion at law firm Paul Hastings, stated enhanced enforcement against Chinese providers was probably even although Democrat Joe Biden will develop into president in January.
He stated if the bill becomes law, “all Chinese companies listed in the U.S. will face enhanced scrutiny by the U.S. authorities and inevitably consider all available options.”
This could include things like listing in Hong Kong or elsewhere, he stated. Several U.S.-listed Chinese firms, such as Alibaba and KFC China operator Yum China, have lately carried out secondary listings in Hong Kong.
()