The top U.S. securities regulator on Wednesday said it has adopted a measure that would kick foreign companies off U.S. stock exchanges if they do not comply with U.S. auditing standards.
The “Holding Foreign Companies Accountable Act”, signed into law by President Donald Trump in December, is aimed at removing Chinese companies from U.S. exchanges if they have fail to comply with U.S. auditing standards for three years in a row.
The amendments will require firms prove to the SEC they are not owned or controlled by an entity of a foreign government and require disclosure around audit arrangements and governmental influence, the SEC said in a statement.
The agency fast-tracked the rule through “interim final amendments”, but is seeking public comments on a process for identifying companies that fail to meet the standards.
The legislation required the SEC to issue rules around how companies should submit documentation within 90 days of enactment.
The SEC is still “active assessing” how to roll out the rest of the law’s requirements, including the identification process and trading prohibition requirements, the statement said.
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