Internet portal operator Sohu.com, one of the first Chinese tech firms to list on Nasdaq in 2000, said it is looking to exit the US exchange, signalling that the company is not confident about meeting strict auditing requirements. The announcement on Wednesday came after the US Securities and Exchange Commission (SEC) on Tuesday added 12 more Chinese companies, including Sohu, to a list of stocks that face a potential delisting for failing to comply with US auditing oversight law. The Holding Foreign Companies Accountable Act (HFCAA), which came into effect in late 2020, requires US-listed foreign firms to comply with audit inspection rules under the Public Companies Accounting Oversight Board (PCAOB), or face the risk of being delisted from US stock exchanges after three consecutive years of non-compliance. Hong Kong to benefit from any ‘mass delisting’ of Chinese firms in US: Paul Chan A total of 23 companies, including Chinese search engine giant Baidu and social media platform Weibo, have been identified by the SEC as being at risk of forced delisting for failing to comply with HFCAA as of March this year. In Sohu’s statement to the SEC, the company said its identification under the HFCAA was expected after the company filed its 2021 annual report last month. “The registrant does not plan to dispute the SEC’s provisional identification,” Sohu said, adding that it has been exploring “alternative courses of action” in view of a possible delisting from Nasdaq. It noted that a delisting or alternatives might have an “adverse effect” on the company’s market value. Sohu did not immediately reply to a request for comment on Thursday. Sohu was one of the first Chinese companies to pioneer the so-called variable-interest entity ( VIE) structure , which enabled it to bypass Chinese regulations and go public in the US in 2000. Since then, hundreds of Chinese companies – mostly tech start-ups – have raised funds offshore through the VIE mechanism. As of March 31, 2022, there were 261 Chinese companies listed on the three major US exchanges, with a combined market capitalisation of US$1.4 trillion, according to a report from the United States-China Economic and Security Review Commission. All US-listed Chinese companies are not in compliance with current US auditing oversight law, according to the same report, which could trigger a “mass delisting” if non-compliance continues. The current US attitude towards American-listed mainland companies will likely drive a significant proportion of them to come back to this part of the world, Hong Kong’s Financial Secretary Paul Chan Mo-po said recently. Many Chinese firms will likely seek listings closer to home as scrutiny intensifies, and potentially over 90 per cent of the market cap can be captured by Hong Kong , according to Chan. At the same time, China has opened the door to VIE-structured companies , allowing them to float shares on domestic exchanges.