On Wednesday afternoon (December 2), the U.S. House of Representatives unanimously passed the Holding Foreign Companies Accountable Act (FCAA), a bill that follows the Senate’s unopposed passage in May.
The bill is now a bicameral, cross-party bill, following its unanimous passage in the Senate in May, and only awaits President Trump’s signature into law.
The Foreign Company Accountability Act prohibits a foreign company from trading in the U.S. if the company does not allow the Public Company Accounting Oversight Board (PCAOB) to inspect its audits for three consecutive years.
The bill also requires public companies to disclose whether they are owned or controlled by foreign governments, including the Communist government of China.
The bill’s original sponsors, Republican Senator John Kennedy and Democratic Senator Chris Van Hollen, issued a statement after the House passed the bill.
“Communist China is now using U.S. securities trading to exploit American workers and families who have invested their pensions and college savings in publicly traded companies. U.S. policy allows China to dangerously ignore the rules that American companies play by. Today, the House joined the Senate in rejecting a toxic status quo,” Senator Kennedy said. “President Trump has taken the lead in demanding that the Communist Party of China act honestly, and I’m glad to see this bill on his desk.
“Millions of American families rely on modest investments to arrange retirement, send their children to college, and deal with financial emergencies. But many people have been cheated out of their money by investing in seemingly legitimate Chinese companies that hold themselves to different standards than other publicly traded companies. This bill corrects that mistake by ensuring that all companies trading in the United States play by the same rules,” said Senator Van Hollen. Senator Van Hollen said. “I was pleased to work with Senator Kennedy on this bipartisan legislation, and I am pleased to see it pass with strong support in the House of Representatives. I urge the President to sign this bill into law immediately.”
In April, the Nasdaq-listed Chinese company Ruixiang Coffee broke out in a falsified sales scandal that led to the delisting of the stock.
Chris Iacovella, CEO of the American Securities Institute, applauded the Democratic and Republican parties for working together to pass this bill that protects American investors from fraudulent companies controlled by the Chinese Communist Party. He said, “For too long, the Chinese Communist Party has been using American investors to finance its cyber army, technology-driven repression of civil liberties, human rights abuses, and environmental destruction.”
The Foreign Corporation Accountability Act, which supplements the Sarbanes-Oxley Act of 2002, requires the SEC to bar a foreign company from trading in the United States if the U.S. Public Company Accounting Oversight Board (PCAOB) is unable to inspect the company’s audit for three consecutive years.
The bill requires a listed foreign company to disclose in its audit report the percentage of the company that is owned by the foreign government entity in which it is located; whether the foreign government entity in which the registered public accounting firm is located has a controlling financial interest in the company; the name of each member of the Communist Party who sits on the board of directors of the company or the entity in which the company operates; and whether the company’s articles of incorporation or equivalent organizational documents contain any reference to the constitution of the Communist Party of China.
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