United States of America: Holding Foreign Companies Accountable Act implemented

On 18 December 2020, S.945, the Holding Foreign Companies Accountable Act, containing regulations on reporting requirements of foreign companies, was implemented after it was signed into law by the US president. The Act applies to companies issuing securities which cannot be fully inspected by the Public Company Accounting Oversight Board because they maintain an accounting firm in a foreign jurisdiction where local rules prevent a full inspection. Such companies are required to certify to the Securities and Exchange Commission (SEC) that they are not owned or controlled by a foreign governmental entity. Specifically, such companies are required to disclose information on the percentage of shares owned by a foreign governmental entity, whether such entities have a controlling share, the names of board members who are also Chinese Communist Party officials, and whether the company's articles of incorporation contain any charter of the Chinese Communist Party. Further, if a company is not subject to Board inspection for three consecutive years, the SEC is required to prohibit the trading of its securities.