You are here: Home » International » News » Markets
Business Standard

Disclose more information or delist, SEC diktat for Chinese companies

Didi set to leave New York, make HK debut

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.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

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