The SEC's move represents the latest salvo by U.S. "I believe these changes will enhance the overall quality of disclosure in registration statements of offshore issuers that have affiliations with China-based operating companies," said Gensler.
Securities and Exchange Commission (SEC) headquarters in Washington, D.C., U.S., May 12, 2021. In addition, Chinese companies should disclose when Chinese law requires them to list in the United States via an offshore shell company, which carries additional legal risks. exchanges and the risks that such approval could be denied or rescinded. These should include that investors face "uncertainty about future actions by the government of China that could significantly affect the operating company’s financial performance" and the enforceability of certain contractual arrangements.Ĭhinese issuers must also disclose if they were denied permission from Chinese authorities to list on U.S.
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On Friday, Reuters reported that the agency was not processing registrations for the issuance of Chinese company securities pending SEC guidance on how to disclose the risks they face in China.įollowing that report, Gensler issued Friday's statement saying that in light of Beijing's crackdown, he had asked staff to seek additional disclosures from Chinese companies before making their registrations effective. stock exchanges must disclose to investors the risks of the Chinese government interfering in their businesses as part of their regular reporting obligations. In an interview with Reuters earlier this week, SEC Commissioner Allison Lee said that Chinese companies listed on U.S. They followed up with crack-downs on technology and private education companies. Deal flows slowed substantially this month after Chinese regulators banned ride-sharing giant Didi Global Inc (DIDI.N) from signing up new users just days after its blockbuster IPO.
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