What is the 'Holding Foreign Companies Accountable' Act? The Holding Foreign Companies Accountable Act, signed into law by then-President Donald Trump in December, is aimed at removing Chinese companies from U.S. exchanges if they fail to comply with . Dec. 18, 2020 [S. 945] "Cooperation between the PCAOB and our international counterparts is vital to facilitating meaningful audit oversight and . SEC Adopts Amendments to Finalize Rules Relating to the Holding Foreign Companies Accountable Act. The SEC amended certain annual reporting and registration forms, Forms 20-F, 40-F, 10-K and/or N-CSR, to implement disclosure requirements under the Holding Foreign Companies Accountable Act, or . "The Holding Foreign Companies Accountable Act is designed to prevent companies based in China and certain other jurisdictions from taking advantage of our deep and liquid capital markets while avoiding the scrutiny that comes with inspection of their financial statement audits. "Communist China has been the bully on the playground of America's stock exchanges for years, and that stops today. On Wednesday, the U.S. Securities and Exchange Commission (SEC) adopted a law called the Holding Foreign Companies Accountable Act. The HFCAA amended SOX to prohibit trading on U.S. exchanges of public reporting companies audited by audit firms located in foreign jurisdictions that the PCAOB has been… [ 1 ] The Senate previously approved the bill by unanimous vote and both the Senate and House expect it to be signed into law by the President. 100% incorporated. The Holding Foreign Companies Accountable Act was a major step in protecting the money American workers have earned and invested. 2. 34-91364 , Holding Foreign Companies Accountable Act Disclosure that address . Under the Holding Foreign Companies Accountable Act (HFCAA), the SEC can ban companies from trading and delist them from exchanges if the Public Company Accounting Oversight Board (PCAOB) is not able to audit requested reports for three consecutive years. "It is designed to assure Financial Statement integrity of 191 U.S.-listed companies with over $1.9 . Sen. Chris Van Hollen (D-Md.) We are adopting interim final amendments to Forms 20-F, 40-F, 10-K, and N-CSR to implement the disclosure and submission requirements of the Holding Foreign Companies Accountable Act (``HFCA Act''). To address this issue, in May, the Senate passed, by unanimous consent, the Holding Foreign Companies Accountable Act, co-sponsored by Senators John Kennedy, a Republican from Louisiana, and Chris Van Hollen, a… It amended the Sarbanes-Oxley Act in requiring these companies to disclose to the United States Securities and Exchange Commission information on foreign jurisdictions that prevent . The PCAOB has determined it cannot inspect auditors in China or Hong Kong, and the SEC will begin identifying affected issuers after annual reports for 2021 are filed This is an updated version of our earlier briefing, revised to reflect the PCAOB's recent actions. On May 20, 2020, the "Holding Foreign Companies Accountable Act" passed the Senate and will now be subject to voting in the House of Representatives. Today's amendments finalize the interim final rules that the Commission adopted in March, which had addressed the submission and disclosure requirements of the HFCAA . Foreign public companies listed in the United States may soon face delisting if their auditors cannot comply with US investor protection laws. "The Holding Foreign Companies Accountable Act may be the most significant piece of investor protection legislation passed in several years," said Congressman Sherman, Chair of the Investor Protection and Capital Markets subcommittee. In December 2020, then-President Donald Trump signed the Holding Foreign Companies Accountable Act (S. 945) (the HFCA Act) into law, after the bill was unanimously passed by the Senate and the House of Representatives. was an original cosponsor of the legislation. Washington D.C., March 24, 2021 —. Following enactment, foreign issuers, especially Chinese issuers, and their accounting firms will face greater pressure to make audit papers available for inspection within the next three years. Text of the Accelerating Holding Foreign Companies Accountable Act is available here. Recap of Holding Foreign Companies Accountable Act. These practices have been unenforceable on firms based in Hong Kong . For over a decade, the PCAOB has been unable to fulfill its SOX mandate to inspect audit firms in "Non-Cooperating Jurisdictions," including China. The "Holding Foreign Companies Accountable Act" will require companies to establish that they are not owned or controlled by a foreign government and allow the U.S. Public Accounting Oversight . The HFCAA requires the Board to determine whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position . Will US delist Chinese companies from exchanges? The Board may, as it deems appropriate, provide assistance in an inspection of a registered public accounting firm organized and operating under the laws of the conducted pursuant to the laws and/or regulations of . Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the HFCA Act and require the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. The Holding Foreign Companies Accountable Act: some questions. President Donald Trump signed into law the Holding Foreign Companies Accountable Act. Last month, the SEC finalized its rules for implementing what is called the Holding Foreign Companies Accountable Act, which permits the SEC to de-list companies if the Public Company Accounting Oversight Board decides it is unable to audit a company fully. 7214), as added by section 2 of this Act, has prepared an audit report . 4 This Act may be cited as the ''Holding Foreign Com-5 panies Accountable Act''. "The Holding Foreign Companies Accountable Act" bars securities of foreign companies from being listed on any U.S. exchange if they have failed to comply with the U.S. Public Accounting . "The Holding Foreign Companies Accountable Act may be the most significant piece of investor protection legislation passed in several years," said Congressman Sherman, Chair of the Investor Protection and Capital Markets subcommittee. LinkedIn. If and when adopted, proposed "Holding Foreign Companies Accountable Act . The Act became law on December 18, 2020. Mar 28, 2019 Introduced Bills and resolutions are referred to committees which debate the bill before possibly sending it on to the . These rules added new Item 9C to Form 10-K and made similar changes to Forms 20-F and 40-F. Enacted on December 18, 2020, the HFCA Act reflects Congressional concern that securities were trading in US markets on the basis of audit reports issued by registered public accounting firms . "It is designed to assure Financial Statement integrity of 191 U.S.-listed companies with over $1.9 . (compare text) S. 4629: America LEADS Act Introduced on Sep 17, 2020. Dec. 2, 2021. 2 †S 945 ES 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 SECTION 1. The Holding Foreign Companies Accountable Act (Act), which was signed into law by President Trump on December 18, 2020, amends the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and requires the . In December 2020, Congress amended the Sarbanes-Oxley Act by enacting the Holding Foreign Companies Accountable Act (HFCAA), 15 U.S.C. The Act is identical to the bill the U.S. Senate passed in May 2020. 7 Section 104 of the Sarbanes-Oxley Act of 2002 (15 Assisting Non-U.S. We can't afford to lose momentum as the CCP grows more aggressive. Among other things, it requires the Commission to identify public companies that have retained a registered public accounting firm to issue an audit report where the firm has a branch or office that: (1) is located in a foreign jurisdiction, and (2) the Public Company Accounting Oversight Board ("PCAOB") has . in the foreign jurisdiction described in clause (i), as determined by the Board; and ''(B) require each covered issuer identified under subparagraph (A) to, in accordance with the rules issued by the Commission under paragraph (4), submit to the Records. Foreign public companies listed in the United States may soon face delisting if their auditors cannot comply with US investor protection laws. The Securities and Exchange Commission has adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the Holding Foreign Companies Accountable Act (HFCA Act). 15 USC 7201 note. As required by the Holding Foreign Companies Accountable Act (the "HFCAA"), the U.S. Securities and Exchange Commission (the . The SEC's Interim Final Rules became effective on May 5, 2021. 06.03.20. §§ 7214(i), 7214a. Holding Foreign Companies Accountable Act (HFCAA), which requires the agency to identify certain issuers that filed annual reports with audit reports issued by registered public accounting firms located in foreign jurisdictions and that the Public Company Accounting Oversight Board (PCAOB) is The SEC in late March issued interim final rules and request for comment in Release No. Specifically, an issuer must make this certification if the Public Company Accounting Oversight Board is unable to audit specified reports because the issuer has retained a . In the last 10 years, the number of Chinese companies listed on U.S. stock exchanges has increased significantly, as those firms take advantage of the capital available in America. On December 2, 2021, the U.S. Securities and Exchange Commission (SEC) adopted final amendments implementing the disclosure and submission requirements of the Holding Foreign Companies Accountable Act (HFCA Act). Here's How. The U.S. Securities and Exchange Commission has finalized the rules it will use to implement a law that allows it to delist Chinese stocks. The Holding Foreign Companies Accountable Act also requires the companies to establish they are not owned or controlled by a foreign government, among other disclosure requirements. Proposed in May 2021, the rule provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the Board is unable to inspect or investigate completely registered public accounting . Holding corporations accountable to diversity and inclusivity; Corporate accountability in environmental, social, and governance; Thoughts from someone new to the corporate world; meeting our commitments; Global; Reimagining the postpandemic workforce; anatomy of Holding Foreign Companies Accountable Act; Big Tech Needs To Be Regulated. In this video, you will learn about "why there is a small chance of US delisting Chinese companies from exch. Today, the Securities and Exchange Commission adopted final amendments to its rules implementing the Holding Foreign Companies Accountable Act of 2020 (HFCAA). The HFCA Act requires the Securities and Exchange Commission (the SEC) to prohibit the trading of securities of a Chinese or . Holding Foreign Companies Accountable Act. On March 18, 2021, the SEC adopted interim final amendments to implement the Congressionally-mandated disclosure and submission requirements of the Holding Foreign Companies Accountable Act (HFCA Act). On May 20, 2020, the U.S. Senate unanimously passed S. 945, the Holding Foreign Companies Accountable Act (HFCAA). The interim final amendments (IFR) adopted by the U.S. Securities and Exchange Commission (SEC) to Forms 10-K, 20-F, 40-F and N-CSR to implement the submission and disclosure requirements of the Holding Foreign Companies Accountable Act (HFCA Act) will become effective May 5, 2021. The HFCAA is summarized here in this Paul, Weiss . These companies have a combined market capitalization of more than $1.8 trillion. On December 18, 2020, the Holding Foreign Companies Accountable Act (the "Act") was signed into law by President Trump after it was passed unanimously by the U.S. House of Representatives on December 2, 2020. Most significantly, the Act requires the U.S. Securities and Exchange Commission (SEC) to prohibit the securities of foreign companies from being listed or traded on U.S. securities markets if the company . SHORT TITLE. See Public Company Accounting Oversight Board; Order Granting Approval of Proposed Rule Governing Board Determinations Under the Holding Foreign Companies Accountable Act, Release No. The Holding Foreign Companies Accountable Act requires publicly traded foreign firms to comply with US auditing rules within three years; 217 Chinese firms with a combined market capitalisation of . On December 2, the U.S. House of Representatives passed the Holding Foreign Companies Accountable Act (the "HFCAA" or the "Act"). 2. 7214) is amended by adding at the end the fol-9 lowing: On May 20, 2020, the United States Senate unanimously passed the Holding Foreign Companies Accountable Act, which requires U.S.-listed foreign companies to comply with regulatory and audit practices under the United States' Public Company Accounting Oversight Board (PCAOB). The HFCAA amended SOX to prohibit trading on U.S. exchanges of public reporting companies audited by audit firms located in foreign jurisdictions that the PCAOB has been… Alibaba was down over 4% at 1:04 p.m. Hong Kong time, Baidu . The interim final amendments adopted by the SEC to Forms 10-K, 20-F, 40-F, and N-CSR to implement the submission and disclosure requirements of the Holding Foreign Companies Accountable Act will . SEC Adopts Amendments to Finalize Rules Relating to the Holding Foreign Companies Accountable Act. On November 5, 2021, as part of the implementation of the Holding Foreign Companies Accountable Act ("HFCA"), the SEC approved PCAOB Rule 6100.. Rule 6100 establishes a framework for the PCAOB's determination that it is unable to inspect or investigate completely registered public accounting firms located in foreign jurisdictions because of a position taken by an authority in that . The act looks to amend the Sarbanes-Oxley Act of 2002, which was created following accounting scandals involving Enron and Worldcom, and will be up . H.R. The rule implements the Holding Foreign Companies Accountable Act. (compare text) History. 2. 2. 1% incorporated. Washington, D.C.-- (Newsfile Corp. - December 2, 2021) - The Securities and Exchange Commission today adopted amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act . Holding Foreign Companies Accountable Act This bill requires certain issuers of securities to establish that they are not owned or controlled by a foreign government. The Public Company Accounting Oversight Board (PCAOB) today issued for public comment a proposed rule related to the PCAOB's responsibilities under the Holding Foreign Companies Accountable Act (HFCAA). On March 24, 2021, the U.S. Securities and Exchange Commission (SEC) adopted interim final amendments to implement the submission and disclosure requirements of the Holding Foreign Companies Accountable Act, or HFCA Act, new legislation requiring additional disclosure by certain foreign issuers operating in countries that limit Public Company Accounting and Oversight Board (PCAOB) audit… The Public Company Accounting Oversight Board (PCAOB) adopted a new rule related to the PCAOB's responsibilities under the Holding Foreign Companies Accountable Act (HFCAA).. On December 2, 2020, the U.S. House of Representatives approved the Holding Foreign Companies Accountable Act (Act). The Holding Foreign Companies Accountable Act is a 2020 law that requires companies publicly listed on stock exchanges in the United States to declare they are not owned or controlled by any foreign government. The Holding Foreign Companies Accountable Act (the "HFCA Act") will also require non-U.S. issuers that use accounting firms not subject to PCAOB inspection to disclose ownership and control by non-U.S. governmental entities, and to identify Chinese Communist Party officials on their boards of directors. 7000: Holding Foreign Companies Accountable Act Introduced on May 22, 2020. Among other things, the rule establishes (i) the manner by which the PCAOB will make its determinations, (ii) the factors that . (b) Requirement.--Each covered issuer that is a foreign issuer and for which, during a non-inspection year with respect to the covered issuer, a registered public accounting firm described in subsection (i)(2)(A) of section 104 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. Importantly, the law protects U.S. investors by prohibiting securities of a company from being listed on any of the U.S. securities . The interim final amendments will apply to registrants that the Commission identifies . On March 18, 2021, the SEC Adopted Interim Final Rules implementing disclosure requirements in the "The Holding Foreign Companies Accountable Act" (HFCA Act). This landmark law will protect the interests of hardworking American investors by ensuring that foreign companies traded in America are subject to the same independent audit requirements that apply to American companies. On December 2, 2020, the US House of Representatives passed by voice vote the Holding Foreign Companies Accountable Act (HFCAA), which would require auditors of foreign public companies to allow the . The Senate passed the Holding Foreign Companies Accountable Act unanimously in May, and the House passed the bill unanimously earlier this month. 6 SEC. 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