The U.S. Securities and Exchange Commission (SEC) has added more than 80 Chinese firms to a list of companies that could face delisting from stock exchanges if they fail to comply with auditing requirements under a 2020 federal law called The Holding Foreign Companies Accountable Act (HFCAA), Reuters reported.
"We have taken note of the situation," said Zhao Lijian, spokesman for the Chinese Foreign Ministry. " Chinese securities regulatory authorities have communicated with U.S. regulatory authorities over this. To my knowledge, it is a step in enforcing domestic law for U.S. regulatory authorities to add certain Chinese companies to the relevant list. It doesn’t mean these companies will inevitably be delisted."
The spokesman added, " concerning U.S.-listed China Concept Stock companies through equal-footed cooperation, which is in line with the interests of Chinese and U.S. capital markets and global investors. Both Chinese and US regulatory authorities have recently said to the press that they are maintaining close communication over auditing and regulatory cooperation and are working toward progress in this area. We look forward to seeing cooperative arrangement reached by the two sides that conforms to regulatory requirements and legal provisions in both countries."
Some Chinese companies face delisting from U.S. stock exchanges for failing to comply with auditing requirements.over
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The Holding Foreign Companies Accountable Act HFCAA was passed into law on December 18, 2020, and its purpose is encapsulated by its name. The SEC had added many Chinese firms to the list of companies that could face delisting if they fail to comply with auditing requirements for three years in a row.
The companies added to the list come at a time when the United States has been demanding complete access to auditing papers for Chinese companies listed on the New York Stock Exchange, according to Reuters. China has refused on grounds of national security, the news agency reported. However, conversations are still ongoing between the countries that an agreement can be reached, Reuters reported.
Notable companies on the list include Alibaba, Baidu, JD.com Inc, TenCent, and Didi Global. Alibaba, TenCent, and Baidu previously escaped delisting under the Trump administration, though their involvement with the Chinese military was noted, the Globe Banner reported.