U.S. lawmakers ratcheted up pressure on Chinese companies whose shares list on American stock exchanges to be more transparent with their financial audits.
Congress on the Friday before Christmas passed legislation to speed up the timeline for kicking companies off the New York Stock Exchange and Nasdaq if Washington regulators can't fully review their audit work papers. After months of high-stakes drama, the tension eased last week when the Public Company Accounting Oversight Board said it gained sufficient access to audit documents from firms in China and Hong Kong for the first time (see
Still, officials said they would continue to review the situation and could change their determination — a threat made more serious by the provision passed on Friday.
China and the U.S. had been at odds over the issue for years, with Beijing citing national security concerns in opposition. The provision — included in a
"I've been fighting for more accountability for foreign companies that use American capital," Representative John Kennedy, a Louisiana Republican who pushed for the change, said in a statement. Regulators are finally getting the power to "remind China that playing by the rules isn't optional," he added.
The White House said President Joe Biden would soon sign the legislation into law.
The long-simmering audit issue morphed into a political one as tensions swelled during the Trump administration. In 2020 Congress set out a three-year timetable for delisting shares for companies whose documents US watchdogs can't review.
"Cranking up the pressure now will help us hold China's feet to the fire and keep investors protected as we continue demanding complete access moving forward," PCAOB Chair Erica Williams said in a statement.
