Chinese businesses that intend to float on US stock exchanges are now required to disclose any government entity control or ownership, and make available evidence of their audits, reports Reuters. The mandate was announced by the US Securities and Exchange Commission on Thursday. The rule advances a process that could lead to more than 200 companies being removed from US exchanges and may make some Chinese companies less attractive to investors.
The new rules implement a law passed by Congress in December 2020 that aims to ensure foreign companies listed in the United States, in particular Chinese companies, comply with US rules.
Unlike many countries, China has not allowed the SEC’s accounting body, the Public Company Accounting Oversight Board, to inspect its auditors, which in turn certify the accounts of Chinese companies listed in the United States. Chinese authorities are reluctant to let overseas regulators inspect local accounting firms due to national security concerns.