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Disclose more information or delist, SEC diktat for Chinese companies

Didi set to leave New York, make HK debut

Topics
Chinese government | China economy | Chinese firms

Associated Press  |  Washington 

Regulators are forcing most private education companies to convert into non-profits, while they’ve pushed other tech players to boost pay for low-skill workers at the expense of earnings.
The rule approved by the Securities and Exchange Commission steps up a long-running stand-off between Washington and Beijing

Chinese companies will have to disclose more information about audits and whether they are controlled by a government or else leave US stock under a rule approved by securities regulators.

The rule approved by the Securities and Exchange Commission steps up a long-running stand-off between Washington and Beijing over how much information companies with US-traded shares must disclosed.

Companies that used an auditor in a foreign jurisdiction will be required to confirm they are not “owned or controlled by a government entity” there, according to the SEC. Companies also will be required to disclose additional information in annual reports. “Trading prohibitions” can be imposed on some companies, the SEC said.

Other governments cooperate with US demands for more financial details from firms to prevent false reporting. But Beijing, citing security concerns, does not allow the US Public Companies Accounting Oversight Board to review work of Chinese auditors.

China’s government criticised the move and warned it might block American investors from access to fast-growing companies. The measure is an attempt to “politically suppress Chinese companies” and “contain China's development,” said a foreign ministry spokesman, Zhao Lijian.

“We are firmly opposed to that,” Zhao said.

Hundreds of Chinese companies have raised tens of billions of dollars in US financial but their status is a matter of growing dispute with Beijing. China’s ruling Communist Party is already tightening control over tech industries and dissuading them from listing on the American

In line with the Chinese crackdown. ride-hailing service Didi Global said it would pull out of the New York Stock Exchange and shift its listing to Hong Kong.

Didi’s one-sentence announcement gave no explanation but share prices of Didi and other tech companies including e-commerce giant Alibaba Group have sunk after they were hit by data-security and anti-monopoly crackdowns.

Regulators said in July they would step up scrutiny of Chinese tech companies with shares traded on foreign exchanges. Entrepreneurs who are largely shut out of the state-run financial system have raised billions of dollars abroad. But Beijing is tightening control over that and promising to give them more ways to raise money in China.

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First Published: Fri, December 03 2021. 23:38 IST
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