More US Listed Chinese Shares Facing Delist Risk: 17 Firms including Zhihu and Li Auto Added to SEC List

Prior to Thursday's adding, SEC has had four similar moves since March 8, placing a total of 23 Chinese companies including internet giants Baidu, Sohu and iQiyi to a list under a law targeting further audit regulation on overseas stocks.

BEIJING, April 21 (TMTPOST)— More and more Chinese listed companies face the risk of delisting from the United States as the securities regulator added a total of 17 firms to a list targeting further audit regulation on overseas stocks.

Source: Visual China

China’s Quora Zhihu, Telsa’s Chinese rival Li Auto, Starbucks’ Chinese challenger Luckin Coffee, CBAK Energy Technology, Inc, an lithium-ion battery manufacturer, KE Holdings, a leading real estate trading platform in China, furniture maker Nova Lifestyle, expense and income tracker app developer LOVARRA, bio-pharmaceutical company BeyondSpring, mobile big data solutions platform Aurora Mobile, electronic commerce platform Scientific Energy, China Foods Holdings Ltd, the beverage subsidiary of COFCO group, Value Exchange International, Inc., an IT solutions provider for retail industry, medical service provider JRSIS Health Care Corporation, rare earths miner Entrepreneur Universe Bright Group, advertising and marketing services provider ZW Data Action Technologies Inc., the investing firm AMTD IDEA Group, and  the supply chain and logistics solutions provider BEST Inc were placed in the provisional list by the U.S. Securities and Exchange Commission (SEC) on Thursday, for failing to abide by the Holding Foreign Companies Accountable Act (HFCAA), which went into effect in last December and allows SEC to prohibit companies from trading and make listed companies be kicked out of U.S. exchanges if the Public Company Accounting Oversight Board (PCAOB), SEC’s accounting body, is unable to inspect or investigate these company audits for three consecutive years.

Prior to Thursday's adding, SEC has had four similar moves affecting 23 Chinese companies in total since March 8, when it for the first time identified Chinese listed firms as the issuers in the list under HFCAA. The watchdog first identified five Chinese issuers including Yum China, and later that month added six more companies including Twitter-like social media Weibo, Baidu, “Netflix of China” iQiyi. Earlier this month, Sohu and 11 other companies became the last group of companies that could be delisted.

In the start of this month, the China Securities Regulatory Commission (CSRC), the country’s top securities regulator, proposed to revise a decade-old rule and delete the requirement about the on-site inspection mainly conducted by China's regulators or relies on inspection results of these domestic regulators, which was seemed as a potential key move to reduce Chinese firms’ delist risks. Earlier this week, CSRC Vice-Chairman Fang Xinghai said the talks between China and U.S. regulators went well. Fang noted the core issue is audit regulation and expressed confidence of the deal. He expected the uncertainties around the regulation would soon be eliminated.

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