The U.S. Securities and Exchange Commission (SEC), on Tuesday, April 12, added 12 Chinese firms to the potential delisting list over the next three years.
These additions bring the total number of firms subject to delisting from the U.S. stock exchanges to 23.
The move came as China is revising the provisions on the overseas listing of domestic companies.
In a press conference on April 2, China Securities Regulatory Commission (CSRC) said, “The revised provisions specifies that requests made by overseas regulators to conduct investigations, including collecting evidence for investigation purpose, and inspections in the Chinese mainland shall be carried out through cross-border regulatory cooperation mechanisms.”
“The CSRC and competent authorities of the Chinese government will provide necessary assistance pursuant to bilateral and multilateral cooperation mechanisms.”
Under the Holding Foreign Companies Accountable Act, the U.S. regulator has permission to access the books of listed companies on the U.S. stock exchanges, including Chinese firms. However, Beijing prohibits foreign review of domestic companies’ accounting papers.
The act allows the SEC to delist Chinese companies from U.S. exchanges if American regulators cannot review the firm’s audits for three consecutive years.
Since March, the SEC has continuously listed Chinese firms on a provisional list that could lead to their delisting from U.S. exchanges.