Caixin
Dec 07, 2020 07:04 PM
FINANCE

China Securities Watchdog Says U.S. Bill on Foreign Government Control Is Discriminatory

What’s new: China’s securities watchdog has said that the Holding Foreign Companies Accountable Act discriminates against Chinese companies listed in the U.S., and it “firmly opposes this practice of politicizing securities supervision.”

The China Securities Regulatory Commission (CSRC) said in a Friday statement (link in Chinese) that the bill requires foreign issuers to provide proof that they are not owned or controlled by a foreign government, disclose names of any board members who are officials of the Chinese Communist Party, and indicate if any articles of incorporation of the issuer contain elements of the party’s charters.

Such requirements “are obviously discriminatory and are not based on professional considerations of securities supervision,” the CSRC said.

What’s the background: The CSRC’s comment came in response to Wednesday’s passing of the act by the U.S. House of Representatives. The bill was approved in May by the Senate.

The legislation, which U.S. President Donald Trump is expected to sign into law, prohibits securities of a company from being listed on any U.S. exchange if the company fails to comply with Public Company Accounting Oversight Board (PCAOB) audits for three years in a row. Although the bill applies to all foreign companies, it is clearly targeted at China.

The PCAOB is a watchdog that inspects audits of public companies listed in the U.S. to ensure the information they provide to the public is accurate, independent and trustworthy.

Chinese companies listed in the U.S. are under siege, caught in the crossfire of escalating political tensions between Beijing and Washington and growing frustration from American regulators without access to the books that may prevent the kind of fraud that left shareholders of Luckin Coffee Inc. nursing billions of dollars in losses.

In an exclusive interview with Caixin in June, Yi Huiman, chairman of the CSRC, pledged continued opening-up, called for cooperation with U.S. regulators and proposed joint investigations of financial fraud.

Related: Cover Story: Cross-Border Cooperation Is Key to Fighting Securities Fraud, CSRC Chief Says

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full Caixin article in Chinese, click here.

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Heather Mowbray (heathermowbray@caixin.com)

Support quality journalism in China. Subscribe to Caixin Global starting at $0.99.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code