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Kennedy bill goes to President’s desk

The House of Representatives today passed the Holding Foreign Companies Accountable Act (The Kennedy Bill) by voice vote. The Senate has already passed the act, so it now goes to the President’s desk to be signed into law.

The act will kick Chinese companies off of US exchanges after three future audits that cannot be inspected by the PCAOB. That means that the ban will not take place for calendar year companies until April 30, 2023 which is when their Form 20F for the third consecutive year (2022) will be due.

Certain disclosures are also required, including government ownership, and names of Communists on the board of the company or operating entities, and whether the articles of incorporation contain the charter of the Communist Party.

The passage of the Kennedy bill likely ends any plan by the SEC to do the same through regulation, as well as the unworkable recommendations of the President’s Working Group. This issue has been in existence since Sarbanes Oxley was passed in 2002. The SEC and PCAOB have always had the ability to do this but lacked the will to do so.

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