Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

There is growing pressure from Congress to crack down on Chinese companies that avail themselves of US capital markets but do not comply with US rules faced by American rivals. (AFP)
Updated 07 August 2020

Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

  • Growing pressure to crack down on Chinese companies that avail themselves of US capital markets but do not comply with rules

WASHINGTON: Trump administration officials have urged the president to delist Chinese companies that trade on US exchanges and fail to meet US auditing requirements by January 2022, Securities and Exchange Commission and Treasury officials said on Thursday.
The remarks came after President Donald Trump tasked a group of key advisers, including Treasury Secretary Steve Mnuchin and SEC Chairman Jay Clayton, with drafting a report with recommendations to protect US investors from Chinese companies whose audit documents have long been kept from US regulators.
It also comes amid growing pressure from Congress to crack down on Chinese companies that avail themselves of US capital markets but do not comply with US rules faced by American rivals.
“We are simply leveling the playing field, holding Chinese firms listed in the US to the same standards as everyone else,” a Treasury official told reporters in a briefing call about the report.
The US Senate unanimously passed legislation in May that could prevent some Chinese companies from listing their shares on US exchanges unless they follow standards for US audits and regulations.
Democratic Senator Chris Van Hollen, who sponsored the bill described the recommendations as “an important first step,” but said that “without the added teeth of our bill, this report alone does not implement the requirements necessary to protect everyday American investors.”
The administration’s recommendations, if implemented via an SEC rulemaking process, would give Chinese companies already listed in the United States until Jan. 1, 2022, to ensure the US auditing watchdog, known as the PCAOB, has access to their audit documents.
They can also provide a “co-audit,” for example, performed by a US parent company of the China-based affiliate tasked with auditing the Chinese firm. However, companies seeking to list in the United States for the first time will need to comply immediately, the officials said.
A State Department official told Reuters the administration plans soon to scrap a 2013 agreement between US and Chinese auditing authorities to set up a process for the PCAOB to seek documents in enforcement cases against Chinese auditors.
China said on Friday that the two countries have “good cooperation” in monitoring publicly listed firms.
“The current situation is that some US monitoring authorities are failing to comply with their obligations, and what they are doing is political manipulation — they are trying to force Chinese companies to delist from US markets,” foreign ministry spokesman Wang Wenbin told a media briefing.
The PCAOB has long complained of China’s failure to grant requests, giving it scant insight on audits of Chinese firms that trade on US exchanges.
The report also recommends requiring greater disclosure by issuers and registered funds of the risk of investing in China, as well as mandating more due diligence by funds that track indexes and issuing guidance to investment advisers about fiduciary obligations surrounding investments in China.
The moves come amid rising tensions between Washington and Beijing over China’s handling of the coronavirus and its moves to curb freedoms in Hong Kong, among other issues.


Alvarez & Marsal named administrators of UAE’s NMC Healthcare

Updated 28 min 4 sec ago

Alvarez & Marsal named administrators of UAE’s NMC Healthcare

DUBAI: Restructuring consultancy Alvarez & Marsal said on Sunday it had been appointed as administrator of a group of operating businesses related to NMC Healthcare by the Abu Dhabi Global Market Courts.

Richard Fleming and Ben Cairns of Alvarez & Marsal have been appointed as joint administrators, the firm said in an emailed statement, adding the administration process would address the “high levels of debt in the businesses.”

NMC Healthcare’s London-listed holding company NMC Health Plc is already being run by Alvarez & Marsal after going into administration in April following months of turmoil over its finances.

The turnaround specialist said on Sunday the appointment related directly to 36 operating businesses in the United Arab Emirates, but did not apply to businesses outside the country.

The appointment “will also allow the group of entities to secure an additional $325 million financing facility whilst protecting the businesses from creditor action,” Alvarez & Marsal said.

The administrators would lead the financial restructuring of those businesses while the existing NMC management team remained in operational control of the day-to-day running of medical and clinical activities, it said.

NMC Health is the largest private health care provider in the UAE, operating more than 200 facilities including hospitals, clinics and pharmacies.

Its implosion this year amid allegations of fraud and the disclosure of more than $4 billion in hidden debt has left some UAE and overseas lenders with heavy losses and prompted legal battles to try and recover money owed.