On March 10, according to relevant media reports, the U.S. Securities and Exchange Commission (SEC) added five companies to the provisional list of the Foreign Company Accountability Act on March 8, including BeiGene, Zaiding Pharmaceutical, Hehuang Pharmaceutical, Shengmei Semiconductor, and Yum China.
It is understood that the Foreign Company Accountability Act is a bill passed by the US Congress, which puts forward additional information disclosure requirements for foreign companies listed in the United States. It was approved by the U.S. Senate in May 2020. It was voted by the House of Representatives on December 2. The Foreign Companies Accountability Act requires that foreign issuers whose securities are prohibited from trading in the United States if they fail to meet the inspection requirements of the U.S. Public Corporation Accounting Oversight Board for accounting firms for three consecutive years.
In response to the company being identified by the SEC as having the risk of delisting, BeiGene and Zaiding Pharmaceutical responded today.
On March 11, BeiGene issued a clarification announcement on compliance with the U.S. Foreign Companies Accountability Act, calling the provisional designation list an administrative measure taken by the SEC to indicate that after the companies recently released their 2021 financial results, the SEC began identifying companies that used auditors that had not been reviewed by the PCAOB.
On March 11, Zai Ding Pharmaceutical issued an announcement that the company did not know the reasons for the SEC to identify it and four other companies, and the SEC's provisional determination did not indicate that Zai Ding Pharmaceutical would be delisted by the NASDAQ exchange.
On March 11, the China Securities Regulatory Commission (CSRC) also issued an urgent response on March 11 to five U.S.-listed companies identifying them as "relevant issuers" at risk of delisting. The China Securities Regulatory Commission said: We have noticed this situation. This is a normal step for U.S. regulators to enforce the Foreign Companies Accountability Act and related implementing rules. We have repeatedly stated our views on the implementation of the Foreign Company Accountability Act. We respect the supervision of relevant accounting firms by foreign regulatory authorities in order to improve the quality of financial information of listed companies, but we resolutely oppose the erroneous practices of some forces to politicize securities supervision. We have always adhered to the spirit of openness and cooperation, and are willing to solve the problem of inspection and investigation of relevant firms by US regulatory authorities through regulatory cooperation, which is also in line with international practice.
The China Securities Regulatory Commission said: Recently, the China Securities Regulatory Commission and the Treasury Department have continued to communicate and dialogue with the U.S. Public Company Accounting Supervision Committee (PCAOB) and have made positive progress. We believe that through joint efforts, the two sides will be able to make cooperation arrangements that meet the legal provisions and regulatory requirements of the two countries as soon as possible, jointly protect the legitimate rights and interests of global investors, and promote the healthy and stable development of the markets of the two countries. (Gao Ruirui)