As the delisting threat rattles a number of U.S.-listed Chinese companies — including some top drugmakers — China is reportedly considering some concessions to make things easier for those local players.
Hutchmed, BeiGene and Zai Lab were among the companies snagged by the SEC days ago for potentially violating a new law that took effect last year, which says companies can be debarred if their financial statements are audited by a third party. company that cannot be examined by US inspectors. Chinese laws currently prohibit foreigners from accessing this information.
Even though drugmakers were quick to reassure investors they were tackling the problem, stocks still fell amid broader market panic.
To solve the problem, Beijing is preparing to relax some of its rules relating to the disclosure of audit information, the FinancialTimes reported.
Under plans being discussed, some Chinese companies listed in the US would be allowed to provide audit information to US accounting regulators. Chinese regulators are also reportedly implementing a “red light, green light” system to clarify what information can or cannot be disclosed overseas.
The moves would come after Vice Premier Liu He stressed the need for financial stability at a meeting of China’s State Council committee.
At the meeting, senior officials noted that “Chinese and U.S. regulators have maintained good communication and made positive progress,” the official Xinhua News Agency reported.
“Both sides are working on a concrete cooperation plan,” he added.