As reported by Bloomberg on April 2, China amended an old rule that limited offshore-listed firms’ financial data sharing practice, removing a legal hurdle for US regulators to have full access to auditing reports of the majority of more than 270 Chinese firms listed in New York.

In a statement on Saturday, April 2, China Securities Regulatory Commission (CSRC) said the draft rules deleted the requirements that on-site inspections should be mainly conducted by Chinese regulatory agencies or rely on their inspection results.

That could give a chance to inspections by US regulators, who demand full access to such companies’ audit working papers, which are stored in China.

The CSRC will help during the process through a cross-border regulatory cooperation mechanism. Meanwhile, all foreign-listed firms will be responsible for properly managing confidential and sensitive information and protecting national information security.

The draft rules mark Beijing’s latest attempt to solve a long-running audit dispute with Washington that could lead to the delisting of roughly 270 Chinese firms from US exchanges in 2024.

More than 200 US-listed Chinese firms have a combined market capitalization of 2.1 trillion dollars as of May 2021. They are composed of eight national-level state-owned enterprises. The threat of delisting and China’s regulatory crackdowns have sparked a selloff in the Nasdaq Golden Dragon China Index, which lost about half its value in the past year.

In March, 11 US-listed Chinese companies, including Baidu and Yum China, were put on the potential delisting list of the US Securities and Exchange Commission (SEC).

Sign up to receive our latest news!

By submitting this form, I agree to the terms.