Recent U.S. Developments, Including Passage of Holding Foreign Companies Accountable Act, Signal Harder Stance with China

7 December 2020
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Key takeaways:
  • Several recent developments related underscore the continued efforts by the U.S. government to address perceived threats from China and Chinese companies.
  • The most significant of these is the Holding Foreign Companies Accountable Act (the “Act”), which was approved by the U.S. House of Representatives on December 2 and which is expected to be signed into law by President Trump later this month. The Act requires the U.S. Securities and Exchange Commission (“SEC”) to issue rules that could prohibit listing or trading securities of non-U.S. SEC reporting companies that retain a foreign accounting firm that cannot be inspected by the Public Company Accounting Oversight Board (“PCAOB”) for three consecutive years, starting in 2021.
  • In addition to the Act, the U.S. government added to its list of Communist Chinese military companies and issued new rules restricting entry into the United States for members of the Chinese Communist Party and their immediate family members. The U.S. State Department has also designated another 14 Chinese officials in connection with the new National Security Law for Hong Kong.