US accounting has begun what may appear to be a three-year deadline for delisting many Chinese companies listed on US stock exchanges as part of a move related to auditing standards, which are at the center of the Beijing-Washington squabble.
The move is prompted by the fact that some Chinese companies have already started seeking listings on the stock markets of mainland China or Hong Kong instead of New York in response to Beijing’s demands for stricter controls over potentially sensitive data. Didi Chuxing, the Chinese car rental giant, said two weeks ago that it would be delisted from the New York Stock Exchange and is now planning a Hong Kong listing instead.
But Chinese regulators wanted to keep US stock listings as an alternative for Chinese companies that are not involved in potentially important political or national security issues. The latest accounting controversy may complicate matters even more.
The Public Company Accounting Oversight Board said late Thursday that it was unable to fully verify audit documents and other documents from accounting firms in mainland China and Hong Kong. The Securities and Exchange Commission has the right to exclude companies that have not passed a fully approved foreign audit within three years.
The board said that in the 13 months to end September, 15 accounting firms registered on the board of directors based in mainland China or Hong Kong signed audit reports for 191 publicly traded companies with a combined global market capitalization of $ 1.9 trillion.
The United States and China have been arguing over audits for over a decade. The China Securities Regulatory Commission has said over the past several years, most recently in a statement on December 5, that it is willing to work with the United States and reach a series of agreements that protect investors, as well as protect China’s security and other interests. …
The American Accounting Commission, a not-for-profit corporation that works closely with the SEC, is challenging China’s flexibility. “They persist in taking a position that prevents the completion or full implementation of such agreements,” the board said.
On Friday, the Chinese commission did not immediately respond. Chinese state-owned media groups said nothing about the board’s decision.
Lee Yu contributed to the research.