The United States Senate approved a bill Wednesday that could exclude Chinese companies from the US Stock Exchange. The legislation could also prohibit those companies from collecting money from US investors without complying with Washington’s regulatory and auditing standards.
The bill, sponsored by Louisiana Republican Senator John Kennedy and co-sponsored by Democratic Senator Chris Van Hollen (Maryland) and Republican Senator Kevin Cramer (North Dakota), requires companies to certify that they “do not they are owned or controlled by a foreign government. ”
Additionally, they would be required to undergo an audit that can be reviewed by the Public Company Accounting Oversight Board, the body that oversees audits of all companies in the United States.
While this legislation, which was unanimously passed, applies to any foreign company, US lawmakers say it primarily targets Chinese companies, amid tensions between Washington and Beijing.
“I don’t want to enter a new cold war,” Kennedy said in the Senate. “All I want, and I think everyone else wants, is for China to abide by the rules.”
On Tuesday, in dialogue with Fox Business Network, White House economic adviser Larry Kudlow expressed his support for tighter supervision of Chinese companies: “We have to protect investors and protect national security. Many of these companies, by the way, have already had scandals and cost investors a lot of money, because they were not transparent in their reports. The Chinese government prohibits that kind of transparency. “
“The Chinese Communist Party cheats, and the Foreign Business Liability Act would prevent them from cheating on the US stock exchanges (…) We cannot let foreign threats to Americans’ retirement funds take root in our bags, ”Kennedy wrote Tuesday afternoon on his Twitter account, hours before the vote in the Senate.
“Hopefully this is a wake-up call to China to bring it into compliance with the rest of the world and allow transparency in the audits of its companies,” added Clete Willems, a former trade adviser to the Trump administration and a partner in Akin Gump. , to CNBC.
China has refused to allow its companies to follow US securities law, arguing that Chinese law prohibits the work of auditors from being transferred outside the country, recalled Steve Dickinson of Harris Bricken. “Put more directly, unlike companies in the United States and Europe, and anywhere else in the world, Chinese companies listed on the US stock exchanges are exempt from significant financial oversight,” he said. lawyer.
In 2019, some 165 Chinese companies were listed on the U.S. Stock Exchange, including Alibaba, the e-commerce giant, which saw its shares drop 2%.
Following passage in the Senate, the bill will now go to the Democrat-controlled House of Representatives before reaching President Trump’s desk for enactment.