China regulator seeks to prevent U.S. foreclosure of Chinese companies

A Chinese national flag flies in front of the China Securities Regulatory Commission (CSRC) building on Financial Street in Beijing, China, on July 9, 2021. REUTERS / Tingshu Wang

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HONG KONG, Nov 25 (Reuters) – Chinese authorities are working with their U.S. counterparts to prevent Chinese companies from being delisted from U.S. stock exchanges, a Chinese regulatory official said on Thursday, as a long-running dispute over trade rules continues. audit.

The US authorities are moving to expel foreign companies from US stock exchanges if their audits do not meet US standards.

The Public Companies Accounting Oversight Board (PCAOB) and US policy makers have long complained about the lack of access to audit working documents for Chinese companies listed in the US. Citing national security concerns, the Chinese authorities have been reluctant to allow foreign regulators to inspect the working papers of local accounting firms.

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“We do not believe that the exclusion of Chinese companies from the US market is a good thing either for companies, or for global investors or for Sino-US relations,” said Shen Bing, director general of the international affairs department of the China Regulatory Commission. China values. he said at a conference in Hong Kong.

“We are working very hard to resolve the audit issue with US counterparts, communication is currently fluid and open. There is a risk that these companies will be delisted, but we are working very hard to prevent that from happening,” added.

In December 2020, during the final weeks of his administration, President Donald Trump signed a law aimed at removing foreign companies from US exchanges if they failed to meet US auditing standards for three years in a row.

A map on the organization’s website showed China as the only jurisdiction denying the PCAOB “necessary access to carry out oversight.”

At the same conference, Ashley Alder, executive director of the Hong Kong Securities and Futures Commission, said he feared that tensions between China and the United States could prevent a solution.

“Sometimes politics can disrupt technical solutions that are sensible and achievable, and I learn a degree of political attitude within the American establishment that doesn’t necessarily lead to a better outcome.”

Hong Kong previously faced similar problems with access to mainland China’s audit working papers, but Alder said the SFC’s relationship with the CSRC and a 2019 agreement had helped resolve them.

Hong Kong has benefited from the Sino-US dispute, as a number of US-listed Chinese companies have made secondary listings in the city in recent years, partly as a back-up in case they companies are delisted from the Nasdaq or NYSE, they say. market participants.

The Hong Kong Stock Exchange confirmed last week that it would proceed with rule changes to make it easier for Chinese companies listed abroad to make secondary listings and for companies to change a secondary listing from Hong Kong to a primary listing.

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Reporting by Scott Murcoch; Written by Alun John; Editing by Muralikumar Anantharaman and Simon Cameron-Moore

Our Standards: The Thomson Reuters Trust Principles.

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