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What to be careful for as talks on US-China audit deal drag on

HONG KONG: The checklist of Chinese language corporations dealing with delisting dangers in New York in a long-running dispute over Chinese language audits of their accounts continues to increase with the addition of three extra on Friday (Aug 5) after e-commerce large Alibaba’s July inclusion.

As talks between Beijing and Washington in quest of a decision drag on, US regulators and politicians have been ratcheting up requires a decision, hammering out a message to China that point is operating out for either side to strike a deal.

This is what it’s worthwhile to know concerning the deal talks up to now, and what to be careful for within the coming months.


US regulators have been demanding full entry to the audit working papers of New York-listed Chinese language corporations, primarily paperwork put collectively throughout the auditing of economic statements. Authorities in China have lengthy been reluctant to let abroad regulators examine home accounting corporations, citing safety considerations.

The spat got here to a head in December when the US Securities and Alternate Fee (SEC) finalised guidelines that allow the prohibition of buying and selling in Chinese language corporations’ shares.

Goldman Sachs estimated in March that US institutional traders held round US$200 billion of American Depositary Receipts (ADRs) in Chinese language corporations.


Regulators from the USA and China have been in negotiations for a deal since final yr. Whereas Beijing has in latest months mentioned either side are dedicated to reaching a deal, Washington has been extra cautious on the outlook.

By Aug 7, the SEC recognized 162 Chinese language corporations listed in New York as dealing with delisting dangers. Buying and selling prohibition will likely be imposed on an organization if it fails to adjust to audit working papers requests for 3 consecutive years, ranging from spring, 2024.

Final week the chair of the US company auditing watchdog mentioned it will not settle for any restrictions on its entry to the audit papers for New York-listed Chinese language corporations.

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