The US House of Representatives have reportedly passed a law under which it could delist Chinese companies from U.S. stock exchanges if they do not fully comply with the country’s auditing rules.
The Holding Foreign Companies Accountable Act bars securities of foreign companies from being listed on any U.S. exchange if they have failed to comply with the U.S. Public Accounting Oversight Board’s audits for three years in a row.
While it applies to companies from any country, the legislation’s sponsors intended it to target Chinese companies listed in the United States, such as Alibaba, tech firm Pinduoduo Inc and oil giant PetroChina Co Ltd.
Democratic Senator Chris Van Hollen, who co-authored the bill with Republican Senator John Kennedy, said in a statement that “American investors have been cheated out of their money after investing in seemingly-legitimate Chinese companies that are not held to the same standards as other publicly listed companies.”
Kennedy said China was using U.S. exchanges to exploit Americans. The House joined the Senate in rejecting a toxic status quo.
The act would also require public companies to disclose whether they are owned or controlled by a foreign government.