China regulator denies report on data strategy to avoid US lifts

Chinese and American flags fly outside a company building in Shanghai, China, November 16, 2021. REUTERS/Ali Song/FILE PHOTO

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HONG KONG (July 25) (Reuters) – China’s securities regulator on Monday denied a media report that Beijing plans to screen Chinese companies listed in the United States based on the sensitivity of the data they hold in a bid to prevent US regulators from delisting hundreds of companies. .

The Financial Times reported Sunday, citing people familiar with the matter, that the three-tiered system aims to get Chinese companies to comply with US rules that require public companies to allow regulators to check their audit files.

In a statement, it said the China Securities Regulatory Commission (CSRC) had “not examined” the three-tier companies’ rating.

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“Companies are required to comply with the relevant national data information management laws, and the regulatory rules and requirements of the place of listing, regardless of whether they are listed domestically or overseas,” the regulator said.

Washington has long demanded full access to the books of Chinese companies listed in the United States, but Beijing, citing national security concerns, is blocking foreign inspections of business papers from domestic accounting firms.

More than 270 Chinese companies listed in New York have been identified as at risk of delisting under the Foreign Holding Company Accountability Act (HFCAA) passed late last year.

The rule gives Chinese companies until early 2024 to comply with audit requirements, although the US Congress is balancing bipartisan legislation that could speed up the deadline to 2023.

China claimed that the two sides are committed to reaching an agreement to resolve the review dispute. Read more

But the US side was more conservative about the forecast.

Earlier this month, Securities and Exchange Commission Chairman Gary Gensler said he was “not particularly confident” that a deal could be struck, according to media reports.

In early April, China moved to resolve a dispute over cross-border audit inspections by proposing to repeal requirements that on-site inspections of Chinese companies listed abroad be conducted primarily by Chinese regulators. Read more

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(Reporting by Martin Pollard and Shi Yu) Editing by Sumit Chatterjee and Stephen Coates

Our Standards: Thomson Reuters Trust Principles.

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