US and Chi­na de­vel­op frame­work for in­spec­tion of 200 US-list­ed com­pa­nies un­der threat of delist­ing

The Pub­lic Com­pa­ny Ac­count­ing Over­sight Board (PCAOB) has struck an agree­ment with Chi­nese reg­u­la­to­ry au­thor­i­ties that would al­low the in­spec­tion of au­dit re­ports for US-list­ed Chi­nese com­pa­nies. Now, ac­cord­ing to SEC chair Gary Gensler, “The proof will be in the pud­ding.”

Rough­ly 200 Chi­nese com­pa­nies — in­clud­ing bio­phar­ma com­pa­nies BeiGene, Hutchmed, Zai Lab, I-Mab, Sino­vac, Gra­cell Biotech­nolo­gies, Ada­gene and Burn­ing Rock Biotech — have been sin­gled out by the SEC for vi­o­lat­ing a new law gov­ern­ing US-list­ed com­pa­nies. The law, called the Hold­ing For­eign Com­pa­nies Ac­count­able Act, stip­u­lates that any for­eign com­pa­nies au­dit­ed by a firm that the non­prof­it PCAOB is un­able to re­view for three con­sec­u­tive years should be delist­ed.

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