The IPO listing number is integrated from Snowball Xu Jiajie Pierre, Phoenix Network, Financial Associated Press, Observer Network, China Fund News, etc.
On the evening of March 10, the Chinese stock became the Chinese stock, and the fall was bloody! The popular Chinese stocks are all down 10% and 20%.
But Teacher Bin was also shocked to send a weibo.
What's going on behind the scenes? The fund Jun checked, the original US Securities regulatory commission SEC, the inclusion of 5 Chinese-listed companies in the provisional list of foreign company accountability law, including BeiGene, Parkson China, Zaiding Pharmaceutical, Shengmei Semiconductor, and Huang Pharmaceutical.
Based on the Foreign Companies Accountability Act (HFCAA), the SEC has the power to delist a foreign public company from the exchange if it fails to file a report required by the U.S. Public Company Accounting Oversight Board for three consecutive years, SEC said. The bill imposes additional disclosure requirements for foreign companies listing in the United States. The act applies to all foreign companies listed in the United States, but it is generally considered to be primarily aimed at Chinese companies listed in the United States.
Last year, the SEC passed amendments on December 2 that finalized the implementing rules for the Holding Foreign Companies Accountable Act (HFCAA). The bill requires foreign companies listed in the U.S. to file documents with the SEC proving that the company is not owned or controlled by a foreign government, and requires these companies to comply with the auditing standards of the U.S. Public Company Accountants Oversight Board (PCAOB). The amendments also require foreign issuers to provide certain additional disclosures in their annual reports for themselves and any merged foreign operating entities. The bill says the SEC is allowed to delist foreign listed companies from the exchange if they fail to file the report required by the U.S. Public Company Accounting Oversight Board for three consecutive years.
The bill requires U.S.-listed foreign companies to file with the SEC proving that the company is not owned or controlled by a foreign government and requires these companies to comply with the audit standards of the U.S. Public Company Accountants Oversight Board (PCAOB). The amendments also require foreign issuers to provide certain additional disclosures in their annual reports for themselves and any merged foreign operating entities.
The bill says the SEC is allowed to delist foreign listed companies from the exchange if they fail to file the report required by the U.S. Public Company Accounting Oversight Board for three consecutive years.
The HFCAA was first proposed in March 2019 to require foreign securities issuers to establish that they are not owned or controlled by foreign governments, and to require U.S.-listed foreign businesses to comply with the audit standards of the U.S. Public Company Accountants Oversight Board or face potential delisting consequences. In December 2020, the U.S. Congress passed the HFCAA and went into effect after it was signed by former U.S. President Donald Trump.
In March 2021, the U.S. SEC passed provisional final rules to implement the Accountability Act for Controlling Foreign Companies (HFCAA). On December 2, 2021, the SEC issued amendments that finalize the interim final rule, establishing a framework for the implementation of the HFCAA.
"We have a fundamental agreement in our securities system that Congress struck on a bipartisan basis under the Sarbanes-Oxley Act of 2002. If you want to issue public securities in the United States, the company that audits your books must be inspected by the PCAOB. SEC President Gary Gensler said in a statement.
"This final rule further reinforces Congressional mandates and goes to the heart of the SEC's mission to protect investors," Jensler noted. The Committee and the PCAOB will continue to work together to ensure that auditors of foreign companies entering the U.S. capital markets comply with our rules. We hope that foreign governments will work with the PCAOB to take action to make it possible. ””
The finalized rules will allow investors to identify U.S.-listed foreign companies that do not allow the PCAOB to examine its audit papers.
Xu Jiajie Pierre: Let's pretend to be a popular science.
This question has been said many, many times before.
Why is our country paying special attention to the data security problem of "foreign listed Chinese stocks".
Why chinese companies go overseas to list, we never allow companies or audit firms to hand over audit papers.
When many big Vs talk about this issue, they have a set of words that are particularly capable of fooling people.
For example, if your Chinese company goes public in the United States, it should abide by the rules of others, it should be audited and inspected, and so on.
There is only one reason why they are so ridiculous: for cross-border financial regulation, bullshit does not work. (I have to offend them.
Chinese companies & Chinese regulators have never wanted to evade cross-border financial regulation.
But there is one thing that must respect the "principle of reciprocity" and that national sovereignty must be respected.
How? Let's take it slowly.
First, we need to understand a little bit.
Audit papers and financial statements are not the same.
The financial report is at most a few dozen pages and a hundred pages is remarkable.
The audit draft is often a few G's.
How many pigs does the company have, what breed of pigs, several customers, where do customers come from, and what background? Have oil and gas reserves? Where is it? Have a communication tower? Where is it? Where's the server installed? All included.
For slightly larger companies, information becomes very sensitive, right?
And then!
In general:
There is a special organization responsible for the cross-border supervision of securities between ordinary countries, called IOSCO. Full name: International Securities Regulatory Commission.
In 2002, the International Organization of Securities Commissions (IOSCO) issued the Multilateral Memorandum of Understanding on Consultation, Cooperation and Information Exchange (MMoU).
Article 7 of the MMoU clearly stipulates that a country's regulator may "request" from a foreign regulatory authority for extensive information and financial audit information involving transaction records and actors.
Both China and the United States are members. Everyone signed a framework agreement and agreed to cooperate on auditing or taxation on IOSCO's big platform.
Of course, the capital markets of Britain and the United States are more special.
The capacity is large, there are many foreign companies listed, and the securities activities are frequent.
So other countries and they can sign their own bilateral agreements to ensure the effectiveness of regulation, taking into account the special circumstances of each country.
Our country signed agreements with U.S. regulators as early as 2013.
The PCAOB (Accounting Supervision Commission for Public Companies in the United States) can request audit papers from the China Securities Regulatory Commission through official channels, and they have also obtained audit papers, and we have never rejected the application of the US side.
But the US side feels that this is not enough, they want to come at any time, check at any time, look at any time, and even take it away at any time.
There is no precedent for this in the world.
Show you some dry goods, or you will think I am making it up.
France also has many companies listed in the United States.
France is also the Permanent Director of the United Nations.
France has also signed a cooperative regulatory agreement with the United States.
How is this agreement required? I found the original text:
Looking at Figure 1 and Figure 2, I will say the general meaning.
France says that to regulate, you can! But PACOB is going to work with H3C in France. H3C: Supreme Council of Statutory Auditors in France. And the H3C must lead the regulatory process, determine the personnel, determine the plan, and after the plan is approved by the H3C, determine which data can be exported and which cannot be, and then submit it to the United States. I found another agreement between Germany and the United States. (Figure 3)
Germany is slightly weaker than France, but it's pretty much the same. Roughly, the two sides can meet to determine who is leading the review and make a plan. Both sides can also "request" to obtain manuscripts in each other's territory, and you can come to Germany to check mine, then I can also go to the United States to check yours. But! Before it can be passed on to the other regulatory authority, it must be determined by the national regulatory authority that the document complies with the country's secrecy act before it can be exported. The problem now is that Americans don't want to sign equality agreements like France and Germany with China. Ah Chuan's subsequent actions show that recently the United States is thinking of bypassing China's regulators and letting the PCAOB "independently" enforce the law and independently check the company's manuscripts. In any normal country, this kind of behavior is not allowed.
On the morning of December 3, Didi Chuxing's official Weibo issued an announcement: After careful study, the company immediately started the work of delisting on the New York Stock Exchange and started the preparation for listing in Hong Kong. Analysts pointed out that this move has a great impact on the confidence of the Chinese stock market. Didi landed on the New York Stock Exchange in a low profile on June 30 this year, however, only 2 days after the listing, the Cyberspace Administration of China issued a notice to launch a cybersecurity review of it and stop new user registration during the review period.
On July 4, the Cyberspace Administration of China announced that according to the report, after testing and verification, the "Didi Chuxing" APP had serious violations of laws and regulations in collecting and using personal information, and asked Didi to make corrections with reference to relevant national standards. Subsequently, the Cyberspace Administration of China issued a notice requiring Didi's 25 apps to be removed from the shelves.
On July 16, the Cyberspace Administration of China, together with the Ministry of Public Security, the Ministry of State Security, the Ministry of Natural Resources, the Ministry of Transport, the State Administration of Taxation, the State Administration of Market Regulation and other departments, jointly entered Didi to conduct a network security review. Since its listing on June 30 this year, according to the issue price of $14 per share, Didi Chuxing's overall share price has fallen by 44.29%, and the market value has evaporated by about $30 billion. According to the highest price of 18.01 US dollars per share when Didi first landed in the US stock market, Didi's stock price fell by 56.69%, and the total market value evaporated by 49.2 billion US dollars, about 313.9 billion yuan.
Screenshot of didi stock price daily candlestick trend (Futu Bull)
On December 2, local time, the U.S. Securities and Exchange Commission (SEC) passed a rule allowing it to delist foreign companies that cannot provide information to auditors from Wall Street exchanges. That could prevent Chinese companies from going public in the United States.
Chinese Foreign Ministry spokesman Zhao Lijian responded that the relevant us practices are another concrete action to suppress the politics of Chinese enterprises, and it is also another concrete manifestation of the US suppression and containment of China's development. We strongly oppose that. China has always believed that in today's highly globalized capital market, it is the right way for all parties concerned to openly and honestly strengthen dialogue and cooperation on issues such as strengthening cross-border regulatory cooperation and protecting the legitimate rights and interests of investors. Politicizing securities regulation to the detriment of others will deprive U.S. investors of the opportunity to invest in many of the world's fastest-growing companies, and will also deprive U.S. professional services institutions of many business opportunities. The US side should have a clear understanding of the situation and provide a fair, just and non-discriminatory environment for foreign enterprises to invest and operate in the United States, instead of setting up obstacles. China will take necessary measures to safeguard its legitimate and legitimate rights and interests.
Mr. Lin Han, a senior partner at Rongfu Law Firm, pointed out to the Observer Network that for a long time, the IPO in the United States has passed the VIE structure model, resulting in only an agreement control between an overseas listed shell company and a Chinese mainland domestic operating enterprise, rather than a direct equity investment, and U.S. investors cannot understand the real subject of investment.
On August 17 this year, SEC Chairman Gary Jensler claimed that SEC staff had been asked to suspend the handling of IPO companies in the United States using the VIE structure. Gary Jensler stressed at the time that neither the Cayman Islands nor companies registered in China could be listed in the United States if the auditors of Chinese operating companies did not disclose their books and records for the next three years. Lin Han pointed out that the amendments issued by the SEC on December 2, local time, only finalized the provisional final rules, establishing a framework for the implementation of HFCAA, and did not have further details.
Lin Han believes that although the previous media generally rendered this series of actions or will trigger a wave of delisting of China Stock Group, gary Jensler's emphasis on delisting premise is that the identified issuers continue to meet the inspection requirements of the PCAOB for 3 years, and if there is no new change in this position, it will not be delisted due to the accountability law until 2024 at the earliest. Therefore, the violent reaction of the market should be the result of the resonance of a series of factors.
On the other hand, some institutional sources said that the sharp decline in Chinese stocks is also related to the new rules on income swaps issued by the China Securities Association on December 3. According to its introduction, many institutions, especially private placements, buy U.S. stocks through income swaps.
On December 3, the Securities Association of China issued the Administrative Measures for the Income Swap Business of Securities Companies (hereinafter referred to as the Administrative Measures). From the date of promulgation of the Administrative Measures, securities companies that have not obtained the qualifications of traders shall not add new income swap business; those who have actually carried out business shall formulate their own rectification plans and settle the stock business in an orderly manner within one year. According to the China Securities Association, since the pilot in 2012, the income swap business of securities companies has developed steadily, and the market demand has gradually expanded, which has played an active role in serving the real economy, serving the asset allocation and risk management needs of investors, and improving the professional service capabilities of securities companies. At the same time, with the development of business, some new situations and new problems have emerged, and the original system rules have obviously not met the needs of business development. To this end, the association has organized the formulation of the "Administrative Measures", which puts forward normative requirements for the income swap business from eight aspects, such as dealer management, investor appropriateness management, transaction target and contract management, margin management, risk control, prohibited behavior, data reporting and monitoring and monitoring, and self-discipline management, aiming to promote securities companies to improve their professional service capabilities and compliance risk control levels, and promote the healthy development of securities company income swap business.