U.S. House of Representatives Passes Bill Requiring Delisting of Covered Issuers for Continued Failure to Allow PCAOB Inspection

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On December 2, 2020, the U.S. House of Representatives (“House”) passed the Holding Foreign Companies Accountable Act, Senate Bill No. 945 (the “bill”). A copy of the bill may be viewed here.

The bill seeks to amend Section 104 of the Sarbanes-Oxley Act of 2002 to require certain issuers to disclose to the Securities and Exchange Commission information regarding foreign jurisdictions that prevent the Public Company Accounting Oversight Board (“PCAOB”) from performing inspections, and for other purposes. The bill would require certain Chinese companies that have a class of securities listed or quoted on stock exchanges in the United States be delisted by such exchanges for, among other things, a failure to comply with the PCAOB audit requirements for three consecutive years.

In prior posts, we have blogged when the bill was unanimously approved by the U.S. Senate and about a bipartisan legislation that was introduced with substantially the same intent.

The House will send the bill to the White House and President Trump is expected to sign it into law.

[View source.]

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.

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