October 7, 2021
Holding Foreign Companies Accountable Act: PCAOB Adopts Final Rule
This Gibson Dunn blog reports that the PCAOB recently adopted a final rule to implement the Holding Foreign Companies Accountable Act and govern PCAOB determinations about oversight of registered public accounting firms outside of the US. The rule requires SEC approval before it goes into effect. In testimony before the House Committee on Financial Services earlier this week, SEC Chair Gary Gensler said that he hopes the Commission can collect public comments and finalize it before year-end.
The blog explains what the HFCAA and the PCAOB rule require. It also notes that if another bill that was passed by the Senate this summer gets signed into law, it would reduce the time period for delisting foreign companies under the HFCAA to two consecutive years, instead of three years. Here are the 3 main takeaways:
1. China and Hong Kong – The Two Jurisdictions Where Registrants Currently Run the Risk of Delisting.
2. The PCAOB Affirmed That Its Analysis Applies to Distinct Legal Entities, Not Networks.
3. Commission-Identified Issuers Are Subject to Reporting and Disclosure Requirements.
See the full blog for details – as well as the memos in our “Audit Documentation” Practice Area. The SEC also just approved a Nasdaq rule change to adopt additional listing criteria for companies in jurisdictions without PCAOB inspection.
– Liz Dunshee