The US Securities and Exchange Commission adopted a new rule on Wednesday that will allow the agency to force companies defying US audit regulations to delist from US exchanges, a move which threatens hundreds of Chinese businesses, reports the South China Morning Post.
According to the rule, all companies with headquarters in a jurisdiction where the authorities refuse to let businesses comply with US regulators will be considered non-compliant, with limited exceptions. The statute does not mention China, but Chinese authorities – citing state secrecy laws – refuse to make available auditing results of companies based there.
The adoption of the rule was the biggest step yet by the US toward instituting the Holding Foreign Companies Accountable Act (HFCAA) that became law at the end of 2020. Under the law, foreign companies listed on US exchanges will face delisting if they fail to turn over audit results for three consecutive years.
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