Five Chinese companies have been ordered to comply with audit requirements by the US Securities and Exchange Commission (SEC) or face delisting from Wall Street.
The initial group of companies named on a list published by the commission on Thursday, could soon be followed by all Chinese companies listed in New York, none of which are currently complying with US regulations in this area.
In total, 248 companies are affected, with a combined market capitalization of about US$2.1 trillion, an ad hoc committee said.
Photo: Bloomberg
The US Congress in 2020 passed a law specifically targeting Chinese companies under which the US Public Company Accounting Oversight Board must be able to inspect audits of foreign firms listed on US markets.
Mainland Chinese and Hong Kong companies are notorious for not submitting their financial statements to US-approved auditors.
The new law therefore puts them at risk of delisting.
Its implementation comes as Chinese authorities have expressed reservations in the past few months about China-based companies listing in the US.
Failure to comply could result in delisting as of 2024.
The five companies named on Thursday were biotech companies BeiGene (百濟神州公司), Zai Lab (再鼎醫藥) and Hutchmed (和黃醫藥), as well as semiconductor industry subcontractor ACM Research (盛美半導體) and restaurant group Yum China (百勝中國).
Yum China, which controls KFC, Taco Bell and Pizza Hut and other eateries in China, surpasses the other companies by far in revenue and capitalization.
Born from the 2016 spin-off of the Chinese operations of US-based Yum Brands, Yum China has a market capitalization of US$18.8 billion.
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