On December 2, 2021, the U.S. Securities and Exchange Commission (SEC) adopted final amendments to its rules implementing the Holding Foreign Companies Accountable Act of 2020 (HFCA Act). Such amendments will soon require certain SEC registrants — mostly those based in China or having a majority of their operations in China — to submit documentation and make disclosures required under the HFCA Act. In addition, the final amendments also establish procedures the SEC will follow in (i) determining whether a registrant is a “Commission-Identified Issuer” and (ii) prohibiting the trading on U.S. securities exchanges and in the over-the-counter market of securities of a “Commission-Identified Issuer” under the HFCA Act.
The final amendments are effective on January 10, 2022. The SEC will begin to identify and list Commission-Identified Issuers on its website shortly after registrants begin filing their annual reports for 2021. The first batch of issuers that would be prohibited from trading in a U.S. securities exchange by the HFCA Act are expected to appear in 2024, after they have been identified as Commission-Identified Issuers for three consecutive years.
Below is a summary of the SEC’s final amendments.
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