In what may spell trouble for Chinese firms, the US Senate has approved a legislation that aims to block the firms not abiding by the country’s accounting laws from listing on the stock exchanges. The bill, which still needs a nod from the House of Representatives and later has to be signed by President Donald Trump to become law, if passed can delist some of the Chinese firms from the US securities exchanges.China has for some time now refused to allow the PCAOB to examine audits of firms whose shares trade on the New York Stock Exchange, Nasdaq and other US platforms.
The bill was introduced by Senator John Kennedy, a Republican from Louisiana, and Chris Van Hollen, a Democrat from Maryland. The legislation comes at a time when the two countries have again entered into a dispute over coronavirus and trade related issues.“We can’t let foreign threats to Americas’ retirement funds take root in our exchanges,” Kennedy said.
The firms would have to certify that they are not under the control of a foreign government, according to the bill. The company’s securities would be barred from the exchange if the Public Company Accounting Oversight Board (PCAOB) is not able to audit the company for three consecutive years to determine that it is not under the foreign government’s control.
“The Chinese Communist Party cheats, and the Holding Foreign Companies Accountable Act would stop them from cheating on the US stock exchanges. We just want Chinese companies to play by the rules,” Kennedy tweeted.
“Publicly listed companies should all be held to the same standards, and this bill makes common sense changes to level the playing field and give investors the transparency they need to make informed decisions,” Van Hollen said. “I’m proud that we were able to pass it today with overwhelming bipartisan support, and I urge our House colleagues to act quickly,” he also said.
