The Holding Foreign Companies Accountable Act: Will Chinese Companies be Delisted from the U.S.?
Asia Society Northern California will launch a five-part U.S.-China program series called Seeking Truth Through Facts on Wednesday, August 12. This first program will be a panel discussion on the topic of The Holding Foreign Companies Accountable Act: Will Chinese Companies Be Delisted from the U.S. in partnership with Pacific Pension & Investment Institute with data provided by Rhodium Group. This event is private and off-the-record.
- Jack Wadsworth, Honorary Chairman of Morgan Stanley Asia and Honorary Chair of Asia Society Northern California
- Lionel Johnson, President of the Pacific Pension & Investment Institute
- Ashbel Williams, Executive Director and Chief Investment Officer, Florida State Board of Administration
- Carson Block, Founder, Muddy Waters Research
- James Lin, Partner, Davis Polk & Wardwell LLP
- Andy Rothman, Investment Strategist at Matthews Asia and Asia Society Northern California Board
- Thilo Hanemann, Partner at Rhodium Group
- Melissa Ma (Moderator), Co-Founder and Managing Partner of Asia Alternatives and Asia Society Northern California Board
On May 20, 2020, the United States Senate unanimously passed the Holding Foreign Companies Accountable Act, which requires U.S.-listed foreign companies to comply with regulatory and audit practices under the United States’ Public Company Accounting Oversight Board (PCAOB). These practices have been unenforceable on firms based in Hong Kong and Mainland China, due to various Chinese laws.
A vote on the bill is now pending in the U.S. House of Representatives. If it is passed and signed into law, several Chinese companies could be forced to delist from U.S. stock exchanges. In response, Yi Huiman, Chairman of the China Securities Regulatory Commission, has expressed support for cross-border cooperation on financial regulation and said that the improvement of information disclosure of listed companies is a shared responsibility among securities regulatory authorities. On the sidelines, this development has also caught the attention of global companies, institutional investors, and foreign policy experts.
Against the backdrop of U.S.-China economic decoupling, if the bill is enacted, is it more likely to force changes in audit inspection access or compel foreign companies to delist? Will this bill hurt or improve the competitiveness of U.S. exchanges in the long run, and during a pandemic-induced financial downturn? Is this a benign financial regulatory issue or one that has geopolitical connotations with regard to U.S.-China relations?