US ratchets up pressure on Chinese firms to share audits as failure to comply could lead to delistings from American bourses

Name: Gloves off at top-level US-China summit in Alaska with on-camera sparring
Uploaded: 2021-05-14T11:00:13.000Z
Duration: 2 min 23 s
Description: Gloves off at top-level US-China summit in Alaska with on-camera sparring

Public Company Accounting Oversight Board announces rule to comply with Holding Foreign Companies Accountable Act

Chinese firms could face delisting in 2024 if they fail to provide access to their audits after Trump-era law passed last year

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The Public Company Accounting Oversight Board has proposed a draft rule in relation to a new US law that could lead to Chinese companies being delisted from American bourses, such as the New York Stock Exchange (above). Photo: AP Photo

Chad Bray

Published: 7:00pm, 14 May 2021Updated: 11:14pm, 14 May 2021

A US accounting oversight board proposed a draft rule to speed the implementation of a Trump-era law that would force publicly traded Chinese companies to delist from American bourses in three years if they do not share their audits for review.

The Public Company Accounting Oversight Board (PCAOB) said on Thursday that the rule change would provide a framework to determine whether local authorities inhibited its inspections of foreign accounting firms that audit US issuers. The public has until July 12 to comment on the proposed rule.

“The rule addresses situations where overseas authorities have denied the PCAOB the access it needs to conduct its mandated oversight activities,” PCAOB chairman William Duhnke III said in a statement.

The proposed rule change came just days after a group of influential Chinese law professors said the Holding Foreign Companies Accountable Act was “discriminative and unfair” to US-listed Chinese companies and Yum China’s top lawyer said the law could “weaken the global role of the US capital markets”.

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Gloves off at top-level US-China summit in Alaska with on-camera sparring

The US law requires foreign companies to delist their shares if they do not allow the PCAOB to review their audit working papers for three consecutive years. The act was signed into law in December in the waning days of the Trump administration after receiving strong bipartisan support in the US and could force Chinese firms to leave American bourses in 2024.