The US Senate approved a bill of punishment for companies that circulate on US exchanges but do not follow the reporting standards adopted in the country. The initiative is aimed mainly at Chinese firms that most often commit such violations, Fox Business reports.
The document still needs to be approved by the Democratic-controlled House of Representatives, after which it will be sent for signature to US President Donald Trump, who has intensified criticism of China recently.
One of the reasons for changing the rules was the situation with the Chinese company Luckin Coffee, which was convicted of falsifying reports and overstating sales for the fourth quarter by 2.5 times. NASDAQ intends to delist in a month and a half, which are reserved for appeal.
However, the document itself was introduced a year ago as part of the search for ways to put pressure on China during the trade war. Currently, Chinese companies are not subject to the same rules that apply to US companies. This situation increases the risk of fraud, especially for small retail investors.
The bill says that a foreign company will lose access to the exchange if within three years it does not give access to the documents of the Securities and Exchange Commission.
More than 150 Chinese companies worth more than 1.2 trillion US dollars are currently traded on US exchanges, so their punishment will be a serious blow to China.
Earlier, Reuters sources indicated that the NASDAQ exchange after the situation with Luckin Coffee is going to tighten its rules in such a way as to deprive the possibility of an initial public offering (IPO) of about a third of potential customers from China. In particular, for the first time to introduce a minimum IPO, and immediately at the level of 25 million dollars, or a quarter of market capitalization after listing.
Events develop against the backdrop of mutual dissatisfaction with each other of the world’s largest economies. In the United States, Beijing is accused of spreading the coronavirus, and the Chinese authorities consider themselves deceived by the terms of the first phase of the trade deal and are even thinking of breaking it.