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China Regulator Moves to Stop Delisting of Chinese Firms in US

US authorities are moving towards kicking foreign companies off American stock exchanges if their audits fail to meet US standards


National flags catch a breeze as the dispute over China stocks delisiting from US exchanges drags on
Chinese and US flags flutter outside an American company office in Beijing. Photo: Reuters

 

Chinese authorities are working with their Washington counterparts to prevent Chinese companies being delisted from US stock exchanges, a Beijing regulatory official said on Thursday, as a lengthy dispute about auditing standards rumbles on.

US authorities are moving towards kicking foreign companies off American stock exchanges if their audits fail to meet US standards.

The Public Company Accounting Oversight Board (PCAOB) and US policymakers have long complained of a lack of access to audit working papers for US-listed Chinese companies.

Chinese authorities have been reluctant to allow overseas regulators to inspect working papers from local accounting firms, citing national security concerns.

“We don’t think that delisting of Chinese firms from the US market is a good thing either for the companies, for global investors or Chinese-US relations,” Shen Bing, director general of the China Securities Regulatory Commission‘s department of international affairs, told a conference in Hong Kong.

Delisting Risk

“We are working very hard to resolve the auditing issue with US counterparts, the communication is currently smooth and open. There is a risk of delisting of these companies but we are working very hard to prevent it from happening,” he added.

In December 2020, during the final weeks of his administration, then-president Donald Trump signed a law aimed at removing foreign companies from US exchanges if they failed to comply with American auditing standards for three years in a row.

The legislation was implemented by the PCAOB in September. A map on the organisation’s website showed China as the only jurisdiction that denied the PCAOB “necessary access to conduct oversight”.

 

  • Reuters with additional editing by Jim Pollard

 


 

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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