President Donald Trump signed legislation that would kick Chinese companies off U.S. stock exchanges unless they adhere to American auditing standards. “The Holding Foreign Companies Accountable Act” forbids 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.
The act would also require public companies to disclose whether they are owned or controlled by a foreign government.
It applies to companies from any country, the legislation’s sponsors intended for it to target Chinese companies listed in the US including Alibaba BABA.K, tech firm Pinduoduo Inc and oil giant PetroChina Co Ltd.
The legislation, like many others, takes a tough stance on Chinese businesses, had passed Congress by a large margin earlier this year. Democrats and Republicans agree with President Trump’s hardline against Beijing, which became tougher this year as President Trump blamed China for the coronavirus ravaging the United States.
Chinese officials have dismissed the measure as a discriminatory policy that politically oppresses Chinese firms.
Chinese authorities have long been reluctant to allow overseas regulators to inspect local accounting firms noting national security concerns.
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