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US Regulators Seen in China For Talks on Delisting Dispute

US accounting regulators have arrived in Beijing in a bid to resolve the long dispute over the auditing of Chinese companies listed on US stock exchanges, people familiar with the matter said


US and Chinese officials are seeking to end an auditing dispute over Chinese firms listed on US exchanges.
Listings of Chinese companies, such as this one by Xueda Education Group back in late 2010, have been under a cloud for two years amid a dispute which prevented US audit teams checking the books of Chinese firms listed on US exchanges. Moves are now underway to try to resolve the row. File photo: Emmanuel Dunand, AFP.

 

US regulators have arrived in Beijing in a bid to settle the long dispute over the auditing of Chinese companies listed on US stock exchanges, people familiar with the matter said.

If the auditing dispute is not resolved, some 248 Chinese firms with stock worth more than $1 trillion could be kicked off exchanges in New York.

This week the US Securities and Exchange Commission added over 80 firms, including JD.com and China Petroleum & Chemical Corp to the list of companies facing possible expulsion.

The talks between officials from the US Public Company Accounting Oversight Board (PCAOB) and their counterparts at the China Securities Regulatory Commission (CSRC) can be described as “late stage” after China made concessions in recent months, the sources said.

The PCAOB group is expected to exit quarantine and start working next week, one source said.

If this visit proceeds as expected, the PCAOB is likely to send a bigger team to China later this year to conduct on-site inspections of local auditors, the person said.

 

ALSO SEE: JD.com, Pinduoduo Among 80 Firms Added to US Delisting Register

 

The sources declined to be identified due to the sensitivity of the issue. The PCAOB and the CSRC did not respond to requests for comment.

Authorities in China have long been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns.

As of Friday, the PCAOB has flagged 128 Chinese firms as at risk of being delisted. About 120 more could potentially be added to that number.

Under the US Holding Foreign Companies Accountable Act (HFCAA), which became law in 2020, the SEC must identify public companies that have retained a registered public accounting firm to issue an audit report where the firm has a branch or office located outside the US, and the PCAOB “has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.”

 

• Reuters with additional editing by Jim Pollard

 

 

ALSO on AF:

Chinese Firms Flock to Switzerland as US Delisting Risks Loom

China Plans Audit Concession Over US Delisting Threat – FT

In Numbers: Possible Impact of China Stocks Delistings

Alibaba Among Top Six China Stocks Worth $1tn Facing US Delisting

China Stocks Delisting From US Puts $1.1 Trillion at Risk

 

 

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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