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Officials from relevant departments of the CSRC answered reporter questions regarding the US Senate’s passing of Holding Foreign Companies Accountable Act
24-05-2020

Question: The US Senate recently passed the Holding Foreign Companies Accountable Act (hereinafter referred to as the proposed Act), which imposes additional disclosure requirements for foreign companies listed on the US securities markets. Some US senators talked explicitly to the public that the proposed Act was targeting China. Does the CSRC have any comment on it?  

CSRC officials: We’ve noticed the passing of the proposed Act by the US Senate. The proposed Act itself and public speeches of certain members of the US Congress reveal that some contents of the proposed Act are targeting China, which has clearly departed from professional considerations of good regulation over securities markets. The CSRC strongly opposes such acts of politicizing securities regulation.

According to the proposed Act, the securities of a foreign issuer that does not satisfy inspection requirements of the US Public Company Accounting Oversight Board (PCAOB) for 3 consecutive years shall be prohibited from being traded in the US markets. To our regret, the proposed Act completely ignores the continuous efforts made by Chinese and US regulators to enhance audit oversight cooperation. The Chinese side has always attached high importance to the audit oversight cooperation between China and the US in respect to capital markets. We facilitated PCAOB’s inspection over a Chinese accounting firm in a pilot program in 2017 and have provided for several times specific proposals to the PCAOB on conducting joint inspections over Chinese accounting firms since 2019. We look forward to receiving positive feedback from the US regulators. We also call on joint efforts from regulators of both sides to engage in equal and constructive consultations, in order to achieve substantial and timely progress in joint inspection over relevant accounting firms, following widely accepted international practices of audit oversight cooperation.

The proposed Act, if enacted, would certainly harm the interests of both China and the US. While impeding foreign issuers from listing in the US, it would also undermine global investors’ confidence in the US capital markets and weaken the US markets’ international standing. Potential issuers of high quality represent valuable resources that attract competitions among capital markets around the globe. We believe international investors will make their wise choices that best suit their own interests.

We would like to urge relevant parties of the US to adhere to professionalism, and make concerted efforts with the Chinese side to address regulatory issues under the principle of respecting the market and the rule of law. Real actions are needed to advance the bilateral audit oversight cooperation by actively constructing consensus and jointly protecting the lawful rights and interests of investors.

  



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