The S&P/BNY Mellon China Select ADR Index, which tracks the American depositary receipts of major U.S.-listed Chinese companies, has lost 22% of its value year-to-date, compared with an 18% rise in the S&P 500 index. auditing requirements.Ī total of 418 Chinese companies are listed on U.S.

The SEC is also under pressure to finalize rules on the delisting of Chinese companies that do not comply with U.S. Last month, the SEC removed the chairman of the Public Company Accounting Oversight Board (PCAOB), which has been unsuccessful in a push to ensure independent auditing of U.S.-listed Chinese companies. listed Chinese companies' concerning lack of transparency.' A group of senators including Republicans John Kennedy and Bill Hagerty wrote to Gensler this week urging 'thorough investigations of U.S. The agency has been under intense pressure from U.S. auditing standards and improve the governance of companies held closely by founders. regulators against corporate China, which has frustrated Wall Street for years with its reluctance to submit to U.S. The SEC's move represents the latest salvo by U.S. 'I believe these changes will enhance the overall quality of disclosure in registration statements of offshore issuers that have affiliations with China-based operating companies,' said Gensler. Securities and Exchange Commission (SEC) headquarters in Washington, D.C., U.S., May 12, 2021. In addition, Chinese companies should disclose when Chinese law requires them to list in the United States via an offshore shell company, which carries additional legal risks. exchanges and the risks that such approval could be denied or rescinded. These should include that investors face 'uncertainty about future actions by the government of China that could significantly affect the operating company’s financial performance' and the enforceability of certain contractual arrangements.Ĭhinese issuers must also disclose if they were denied permission from Chinese authorities to list on U.S. On Friday, Reuters reported that the agency was not processing registrations for the issuance of Chinese company securities pending SEC guidance on how to disclose the risks they face in China.įollowing that report, Gensler issued Friday's statement saying that in light of Beijing's crackdown, he had asked staff to seek additional disclosures from Chinese companies before making their registrations effective. stock exchanges must disclose to investors the risks of the Chinese government interfering in their businesses as part of their regular reporting obligations. In an interview with Reuters earlier this week, SEC Commissioner Allison Lee said that Chinese companies listed on U.S. They followed up with crack-downs on technology and private education companies. stock market reaching daily record highs.ĭeal flows slowed substantially this month after Chinese regulators banned ride-sharing giant Didi Global Inc (DIDI.N) from signing up new users just days after its blockbuster IPO. rules that require public companies to disclose to investors a range of potential risks to their financial performance.Ĭhinese listings in the United States have reached a record $12.8 billion so far this year, according to Refinitiv data, as companies swooped in to capitalize on the U.S. policymakers' concerns that Chinese companies are systematically flouting U.S. In a statement, Securities and Exchange Commission Chair Gary Gensler said he had also asked staff to 'engage in targeted additional reviews of filings for companies with significant China-based operations.' securities regulator will not allow Chinese companies to raise money in the United States unless they fully explain their legal structures and disclose the risk of Beijing interfering in their businesses, the agency said on Friday, confirming an exclusive report by Reuters.

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