United States steps up disclosure pressure on Chinese companies

‘Trading prohibitions can be imposed on some firms’

WASHINGTON: Chinese companies will have to disclose more information about audits and whether they are controlled by a government or else leave US stock markets under a rule approved by securities regulators.

The rule approved on Thursday by the Securities and Exchange Commission (SEC) steps up a long-running standoff between Washington and Beijing over how much information companies with US-traded shares must disclosed.

Companies that used an auditor in a foreign jurisdiction will be required to confirm they are not owned or controlled by a government entity there, according to the SEC.

Companies also will be required to disclose additional information in annual reports. Trading prohibitions can be imposed on some companies, the SEC said.

Other governments cooperate with US demands for more financial details from companies to prevent false reporting. But Beijing, citing security concerns, refuses to allow the US Public Companies Accounting Oversight Board to review work of Chinese auditors.

China’s government criticized the move and warned it might block American investors from access to fast-growing companies.