HONG KONG: Chinese authorities are working with U.S. counterparts to prevent Chinese companies from being removed from U.S. stock exchanges, a Chinese inspector said Thursday, Jan.
The US authorities are moving to kick foreign companies off the US stock exchanges if their audits do not meet US standards.
The Public Company Accounting Oversight Board (PCAOB) and US politicians have long complained about the lack of access to audit working papers for US-listed Chinese companies. Citing national security concerns, the Chinese authorities were reluctant to allow foreign regulators to inspect working papers of local accounting firms.
“We don’t believe that removing Chinese firms from the US market is a good thing for businesses, global investors, or Sino-US relations,” said Shen Bing, general director of international affairs at China Securities Regulatory Commission said at a conference in Hong Kong.
“We are working very hard to solve the exam problem with our US colleagues. Communication is currently smooth and open. These companies are at risk of being removed from the list, but we are working very hard to prevent it, ”he added.
In December 2020, in the final weeks of his tenure, President Donald Trump signed a law aimed at removing foreign companies from US exchanges if they failed to meet American auditing standards for three consecutive years.
A map on the organization’s website showed China as the only jurisdiction denying the PCAOB “necessary access to conduct oversight.”
Ashley Alder, CEO of the Hong Kong Securities and Futures Commission, said at the same conference that he is concerned that Sino-US tensions may prevent a solution.
“Sometimes politics can disrupt technical solutions that are reasonable and achievable, and I gain a political stance within the US establishment that is not necessarily conducive to a better outcome.”
Hong Kong previously had similar issues with accessing audit working papers in mainland China, but Alder said the SFC’s relationship with the CSRC and a 2019 agreement helped resolve it.
Hong Kong has benefited from the Sino-US dispute as a number of US-listed Chinese companies have taken secondary listings in the city in recent years, in part in support of the company in the event the Nasdaq or NYSE delist them become, say, market participants.
The Hong Kong Stock Exchange confirmed last week that it would proceed with rule changes to make it easier for overseas-listed Chinese companies to conduct secondary listings and to make it easier for companies to convert a Hong Kong secondary listing into an initial listing.