The Securities and Exchange Commission (SEC) U.S. said that they will start to exclude Chinese companies from the list. The shares of US-listed Chinese companies such as BeiGene plunged after delisting. Apparently, SEC recognized them as the pioneering companies whose audits regulators do not perform the Holding Foreign Companies Accountable Act’s inspections.
BeiGene, Yum China Holdings, Zai Lab, ACM Research, and Hutchmed face 27% downfall from their New York-listed shares. Alibaba Group Holding in the US-listed Chinese stock also fell by almost 8%.
SEC has long announced in 2020 that HFCAA prohibits overseas companies from longer listing if they do not meet audit inspection requirements in three years. Five companies are to comply with that three years deadline. Seemingly, China is continuously blocking U.S. regulators from conducting their companies audit and national security grounds. The Public Company Accounting Oversight Board (PCAOB) could not find Chinese companies’ access to relevant audit documents. This block happened, even though they have agreed to sign a memorandum of understanding on enforcement cooperation in 2013.
Audit reports for 191 public companies plus combined market capitalization on both U.S. and non-US exchanges have signed $1.9trn. It was, according to the PCAOB, in a year long with 15 PCAOB-registered firms in mainland China. Having this situation, Hong Kong has celebrated the benefit from Alibaba, JD.com, and NetEase which completed secondary listings in the region. The opportunity Hong Kong can get from US-listed Chinese companies delisting from secondary listings.
BeiGene argued that the company will remain listed in HongKong, Shanghai and Nasdaq. In the meantime, the company will seek a solution to meet HFCAA’s requirements. Zai Lab believed that SEC identification does not endanger BeiGene’s position in Nasdaq. So, ACM Research concluded that BeiGene is pursuing the solution actively to meet what SEC wants.
