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Holding Foreign Companies Accountable Final Rules Effective Soon

Saturday, May 1, 2021 The  interim final amendments (IFR) adopted by the U.S. Securities and Exchange Commission (SEC) to Forms 10-K, 20-F, 40-F, and N-CSR to implement the submission and disclosure requirements of the Holding Foreign Companies Accountable Act (HFCA Act) will become effective May 5, 2021. The SEC is seeking public comments on the IFR which are due on the same date. Background As explained in our earlier alert (available  here), the HFCA Act was signed into law by former President Trump on December 18, 2020. The HFCA Act requires the SEC to identify reporting public companies using registered public accounting firms (auditors) with a branch or office located in a foreign country that the Public Company Accounting Oversight Board (PCAOB) determines that it is unable to “inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction” (Commission-Identified Issuers). The PCAOB has not yet issued rules setti

Baidu in the driver s seat

Baidu in the driver’s seat Despite regulatory concerns, the Chinese tech company is a leader in AI and commercialising technology in cars and public transport. Save Share Along with a number of other Chinese tech names, Baidu shares have seen some pressure since March on regulatory concerns. Despite that, we believe the company has attractive long-term potential given some major advancements it has made in artificial intelligence and commercialising key technology. US regulators have been pressuring Chinese companies on a mix of issues from adherence to US auditing practices to links to Chinese national defence. The latter led to the virtual delisting of China Mobile recently due to US national concerns. The former (audit concerns) is more relevant to Baidu following the Holding Foreign Companies Accountable Act on compliance with US auditing standards. Baidu is also feeling regulatory creep with the Chinese government expanding its oversight of larger tech companies.

China Will Act to Prevent Capital Flows From Destabilizing Stock Market, Regulator Says

China Has the Power to Stop Capital Flows From Destabilizing Stock Market, Regulator Says Fang Xinghai, vice chairman of the China Securities Regulatory Commission, speaks at the Boao Forum for Asia in Hainan province on April 19. Photo: VCG China’s financial authorities are closely monitoring flows of overseas capital into and out of the mainland stock markets and are confident they can maintain market stability in the event of any sudden large movements of funds, a senior regulatory official said Monday. The China Securities Regulatory Commission (CSRC) is capable of preventing volatility in domestic markets that may be triggered by large capital inflows and outflows, Fang Xinghai, a vice chairman of the watchdog, said during a panel discussion at the annual Boao Forum for Asia taking place on the southern island province of Hainan.

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