Five New York-listed Chinese firms have been named by the US Securities and Exchange Commission (SEC) as the first of up to 270 that face delisting if they do not provide required audit documents to support their financial statements, reports the Financial Times. The SEC said that fast-food giant Yum China, biotechnology groups BeiGene, Zai Lab and HutchMed, and technology company ACM Research faced delisting. The announcement triggered a sell-off in Chinese stocks that are traded in the US.
The regulator’s move comes after the US passed a law in December 2020 that required Chinese companies listed in the US to allow watchdogs such as the Public Company Accounting Oversight Board to review their financial audits.
The Holding Foreign Companies Accountable Act set a three-year deadline for companies and their auditors to comply. The SEC’s notice on Thursday begins the countdown for compliance for the five companies.