Business information

Disclose more information or remove from list, SEC diktat for Chinese companies

Chinese companies will need to disclose more information about audits and whether they are controlled by a government or exit the US stock markets under a rule approved by securities regulators.

The rule approved by the Securities and Exchange Commission reinforces a long-standing deadlock between Washington and Beijing over the amount of information companies with shares traded in the United States must disclose.

Companies that have hired an auditor in a foreign jurisdiction will be required to confirm that they are not “owned or controlled by any government entity,” according to the SEC. Companies will also be required to disclose additional information in their annual reports. “Trade bans” may be imposed on certain companies, the SEC said.

Other governments are cooperating with U.S. demands for more financial details from companies to avoid misrepresentation. But Beijing, citing security concerns, does not allow the U.S. SOE Accounting Oversight Board to review the work of Chinese auditors.

The Chinese government has criticized the move and warned that it could prevent U.S. investors from accessing fast-growing companies. The measure is an attempt to “politically suppress Chinese companies” and “contain the development of China,” Foreign Ministry spokesman Zhao Lijian said.

“We are strongly against this,” Zhao said.

Hundreds of Chinese companies have raised tens of billions of dollars in US financial markets, but their status is the subject of a growing dispute with Beijing. The ruling Communist Party in China is already tightening its control over tech industries and dissuading them from entering US markets.

In line with the Chinese repression. Ridesharing service Didi Global has said it will withdraw from the New York Stock Exchange and move its listing to Hong Kong.

Didi’s one-sentence announcement gave no explanation, but stock prices of Didi and other tech companies, including e-commerce giant Alibaba Group, plummeted after being hit by security measures. data and anti-monopoly.

Regulators said in July they would step up scrutiny of Chinese tech companies whose shares are traded on foreign stock exchanges. Entrepreneurs who are largely excluded from the public financial system have raised billions of dollars abroad. But Beijing is tightening control over this and promises to give them more ways to raise funds in China.

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