The Holding Foreign Companies Accountable Act and Related Nasdaq Proposed Rule Changes

Recent measures from U.S. lawmakers and Nasdaq to impose additional requirements on U.S.-listed China-based companies could have wider implications.

On May 20, 2020, the U.S. Senate unanimously passed the Holding Foreign Companies Accountable Act ("Act"), which could have significant implications for China-based companies that are publicly listed in the United States, including possible mandatory delistings for companies that fail to comply. The Act focuses on the inability of the U.S. Public Company Accounting Oversight Board ("PCAOB") to inspect auditors based in China and Hong Kong as part of their regular review of auditors of publicly listed companies. Companies whose auditors fail to be inspected by the PCAOB for three consecutive years will be subject to mandatory delisting.

In early June 2020, the Securities and Exchange Commission published Nasdaq rule proposals that would apply additional restrictions on companies from so-called "restrictive markets" that have laws or regulations restricting access to information by regulators of U.S.-listed companies in such jurisdictions. If the Act becomes law and the Nasdaq rule proposals are adopted, China-based companies will face additional challenges to become and remain publicly listed companies in the United States for as long as China continues to block PCAOB access to auditors in China.

Please see full White Paper below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Jones Day | Attorney Advertising

Written by:

Jones Day

Jones Day on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.