A bipartisan bill to speed up the time it takes to prevent foreign companies from being listed on U.S. exchanges if they fail to meet certain Public Company Accounting Oversight Board standards was introduced in the House on Tuesday.
Rep. Brad Sherman, D-Calif., chairman of the Subcommittee on Investor Protection, Entrepreneurship and Capital Markets, Rep. Andy Barr, R-Ky., and Rep. Victoria Spartz, R-Ind., introduced the Accelerating Holding Foreign Companies Accountable Act.
The bill would reduce the number of years a foreign company can refuse or be unavailable for PCAOB inspection to two years from three years before having their securities delisted. The bill is a companion to a Senate version introduced in June by Sens. John Kennedy, R-La., and Marco Rubio, R-Fla. The Senate passed the bill the same month it was introduced via unanimous consent.
In late 2020, President Donald Trump signed the Holding Foreign Companies Accountable Act into law, which established the three-year time frame for foreign companies possibly having their securities delisted on U.S. exchanges if they refuse or are unavailable for PCAOB inspections or investigations.
The law requires that the PCAOB determine whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by an authority in that jurisdiction. For over a decade, Chinese authorities have effectively blocked the PCAOB from conducting effective oversight of audit firms based in China and Hong Kong, according to a news release from Mr. Sherman.
"The purpose is not to delist any company, but to persuade China to allow the audit oversight that U.S. investors need, and the U.S. investors get when investing in all U.S. companies as well as companies in over 50 foreign jurisdictions," Mr. Sherman said in the release.
The Securities and Exchange Commission approved a rule in November that established a framework for the original Holding Foreign Companies Accountable Act's implementation.