Chinese tech firms in the United States could be forced to leave the US market after the country’s Securities and Exchange Commission (SEC) started implementing a law to remove foreign firms that did not comply with local accounting standards.
Recently, the SEC, which regulates the US stock markets, amended the Holding Foreign Companies Accountable Act to remove from the US stock markets foreign firms that did not comply with local accounting standards.
“The SEC has adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the Holding Foreign Companies Accountable Act (HFCA Act),” the SEC said in a statement.
The SEC said that it was “seeking public comment on these submission and disclosure requirements” within 90 days of the date of the enactment of the changes.
The HFCA Act would allow the SEC to kick foreign companies off US stock exchanges if they did not comply with the country’s auditing standards.
Signed into law in December last year, the HFCA Act was primarily aimed at removing Chinese companies from US exchanges if they failed to comply with US auditing standards. The law also requires firms to prove to the SEC they are not owned or controlled by an entity of a foreign government, and to name any board members with such links.