US Senate passes bill to delist Chinese companies from exchanges
PrintListen to this Article
The bill, introduced by Senator John Kennedy, a Republican from Louisiana, and Chris Van Hollen, a Democrat from Maryland, was approved by unanimous consent and would require companies to certify that they are not under the control of a foreign government.
US lawmakers have raised red flags over the billions of dollars flowing into some of China’s largest corporations, much of it from pension funds and college endowments in search of fat investment returns. Alarm has grown in particular that American money is bankrolling efforts by the country’s technology giants to develop leading positions in everything from artificial intelligence and autonomous driving to internet data collection.
Shares in some of the biggest US-listed Chinese firms, including Baidu and Alibaba, slid on Thursday in New York while the broader market gained.
If a company can’t show that it is not under such control or the Public Company Accounting Oversight Board, or PCAOB, isn’t able to audit the company for three consecutive years to determine that it is not under the control of a foreign government, the company’s securities would be banned from the exchanges.
“I do not want to get into a new Cold War,” Kennedy said on the Senate floor, adding that he wants “China to play by the rules.”
“Publicly listed companies should all be held to the same standards, and this bill makes common sense changes to level the playing field and give investors the transparency they need to make informed decisions,” Van Hollen said in a statement. “I’m proud that we were able to pass it today with overwhelming bipartisan support, and I urge our House colleagues to act quickly.”
Stricter US oversight could potentially affect the future listing plans of major private Chinese corporations from Jack Ma’s Ant Financial to SoftBank-backed ByteDance Ltd. But since discussions on increased disclosure requirements began last year, many other Chinese companies have either listed in Hong Kong already or plan to do so, said James Hull, a Beijing-based analyst and portfolio manager with Hullx.
“All Chinese US-listed entities are potentially impacted over the coming years,” he said. “Increased disclosure may hurt some smaller companies, but there’s been risk disclosures around PCAOB for a while now, so it shouldn’t be a shock to anyone.”
The Senate measure is an example of the rising bipartisan pushback against China in Congress that had been building over trade and other issues. It has been amplified especially by Republicans as President Donald Trump has sought to blame China as the main culprit in the coronavirus pandemic.
GOP lawmakers have in recent weeks unleashed a torrent of legislation aimed at punishing China for not being more forthcoming with information or proactive in restricting travel as the coronavirus began to spread from the city of Wuhan, where it was first detected.
Trump escalated his rhetoric against China on Wednesday night, suggesting that leader Xi Jinping is behind a “disinformation and propaganda attack on the United States and Europe.”
“It all comes from the top,” Trump said in a series of tweets. He added that China was “desperate” to have former Vice President Joe Biden win the presidential race.
At issue is China’s longstanding refusal to allow the PCAOB to examine audits of firms whose shares trade on the New York Stock Exchange, Nasdaq and other US platforms. The inspections by the little-known agency, which Congress stood up in 2002 in response to the massive Enron Corp accounting scandal, are meant to prevent fraud and wrongdoing that could wipe out shareholders.
Since then China and the US have been at odds on the issue even as companies including Alibaba and Baidu have raised billions of dollars selling shares in American markets. The long-simmering feud came to the forefront last year as Washington and Beijing clashed over broader trade and economic issues, and some in the White House have been urging Trump to take a harder line on the audit inspections.
Last week, Trump said in an interview said that he’s “looking at” Chinese companies that trade on the NYSE and Nasdaq exchanges but do not follow US accounting rules. Still, he said that cracking down could backfire and simply result in the firms moving to exchanges in London or Hong Kong.
While not technically part of the government, the PCAOB is overseen by the Securities and Exchange Commission. The ability to inspect audits of Chinese firms that list in the US is certain to come up at a roundtable that the SEC is holding July 9 on risks of investing in China and other emerging markets. #casansaar (Source - Times of India, Bloomberg)
Category : International Business | Comments : 0 | Hits : 282
Chartered accountants from the UK and Canada might be allowed to practice in India on a reciprocal basis, with the apex body ICAI making the proposal to the Government. ICAI President Ranjeet Kumar Agarwal, on February 21, said the proposal will be implemented strictly on the reciprocal basis that chartered accountants (CAs) from India will also be allowed to practice in the United Kingdom and Canada. It will be the first time that overseas CAs will be allowed to practice in India. The pro...
The tax department is considering a proposal under which credit card holders will have to file a declaration with the issuer entity within a stipulated time, specifying the nature of expenses incurred in foreign currency for the purpose of TCS levy, sources said. The I-T department is in talks with the RBI and other stakeholders to firm up a mechanism for distinguishing whether the expense is towards medical/education which attract a 5 per cent TCS or for other purposes on which a 20 per cent...
Concerns have been raised about the applicability of Tax Collection at Source (TCS) to small transactions under the Liberalized Remittance Scheme (LRS) from July 1, 2023. To avoid any procedural ambiguity, it has been decided that any payments by an individual using their international Debit or Credit cards upto Rs 7 lakh per financial year will be excluded from the LRS limits and hence, will not attract any TCS. Existing beneficial TCS treatment for education and health payments will also co...
The ministry on May 16 notified the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023, to include international credit card payments in the LRS. Any remittance beyond USD 2.5 lakh or its equivalent in foreign currency would require approval from the RBI. Earlier, the usage of international credit cards (ICCs) for making payments for fulfilling expenses during travel outside India was not included in the LRS limit. According to the notification, the Finance ...
Canada’s immigration minister Sean Fraser has announced Express Entry invitations to FSWP and CEC candidates will resume by “early July 2022” The vast majority of new Express Entry applications will be processed within the six-month service standard. According to IRCC, current Express Entry processing times range from seven months to in excess of 20 months. Summary of Canada's Immigration Levels Plan Each year, the federal department of Immigration, Refugees ...
Comments