Will a large number of Chinese enterprises be forced to delist from the United States? This vote is crucial

category:Finance
 Will a large number of Chinese enterprises be forced to delist from the United States? This vote is crucial


According to the report, Chinese officials have been critical of the bill, saying that there is a better way to resolve the differences between Washington and Beijing over audit issues, while allowing Chinese companies to delist would damage the U.S. capital market.

According to reports from both parties, the bill has received support. The bill was passed unanimously in the Senate in May, which means that if the house of Representatives passes it, it will have the conditions for trump to sign into law. The U.S. Securities and Exchange Commission is also considering a proposal that would require audit review as a condition for continued listing on the stock exchange, but would allow companies that do not comply with the rules to conduct over-the-counter trading.

Reported that the Senate version of the bill by Louisiana Republican Senator John Kennedy and Maryland Democratic Senator Chris Van Hollen co sponsored.

In the United States, the audit supervision is undertaken by a special supervision body, namely, the accounting oversight committee of listed companies. The reason for the establishment of the committee is that a number of accounting scandals occurred nearly 20 years ago, leading to the bankruptcy of Enron and other enterprises.

I hope that if this bill is passed, it will become a lever to leverage the Chinese side and the US side to sit down and solve the problem, said Dan gorzer, a former general adviser to the securities and Exchange Commission and a former member of the accounting oversight board of listed companies

However, if the bill forces a large number of Chinese Listed Companies in the United States to withdraw from the U.S. market, American investors holding their shares will face risks and difficulties.

Generally speaking, when the New York Stock Exchange or NASDAQ announces the delisting of a company, its shares will still be traded over the counter, so investors can continue to buy and sell such stocks, the report said. But the bill, sponsored by Senator Kennedy, also stipulates that Chinese companies will not be allowed to trade over-the-counter if their audit results are not reviewed after three years.

Some companies have said that if the bill is passed, they will switch to listing on exchanges outside the United States, the report said. The bill says it is possible to force Hong Kong investors to convert their Chinese holdings. But it will be difficult for some investors to do so because not all U.S. brokerage firms can provide access to foreign stock markets.

Investors may encounter many difficulties in converting their relevant common shares into Hong Kong shares, and investors may have to pay more costs or suffer losses, the Chinese company said in a July filing with the US Securities and Exchange Commission

Other Chinese companies may be delisting, the report said. The delisting mechanism is relatively simple. Investors can exchange their shares for cash. But the management team can buy all the shares held by American shareholders at a low price, which will benefit insiders and sacrifice external investors.

They could privatize the company at a low price by threatening to delist, said Jesse fried, a law professor at Harvard University. In this way, the law will make us investors worse off.

Pedestrians pass the New York Stock Exchange on November 9. Xinhua News Agency

Source of this article: reference information editor: Chen Hequn_ NB12679