On March 31, the head of the International Department of the China Securities Regulatory Commission (CSRC) issued a reply to a reporter's question before the session, reporting on the progress of Sino-US audit regulatory cooperation and responding to the fact that some Chinese enterprises were listed on the delisting risk list by the US Securities Regulatory Commission.

The head of the international department of the China Securities Regulatory Commission said that the Chinese side and the US Public Company Accounting Supervisory Board (PCAOB) have held several rounds of frank, professional and efficient talks, which are progressing smoothly and the communication between the two sides will continue. Both sides are willing to resolve their differences and problems, and the final outcome depends on the wisdom and original intentions of both sides.

With regard to some companies listed as delisting risks by the SEC, the CSRC said that it has learned from the US SEC that this is a normal procedure for US regulators to implement the Foreign Company Accountability Law, and whether the listed companies are really delisted in the next two years will ultimately depend on the progress and results of Sino-US audit regulatory cooperation.

On Wednesday, local time, the US Securities and Exchange Commission added Baidu, Inc., Futu Holdings Limited, iQIYI, Inc., Kaixin Yuanda Pharmaceutical and Nocera, a fishery company, to the "pre-delimited list", the third batch of Chinese-listed stocks to be added to the list since March.

In the relevant companies, as of press time, Futu has responded to this. Baidu, Inc. 's Hong Kong shares fell sharply in early trading, falling nearly 5 per cent at one point.

The overall communication between China and the United States is progressing smoothly.

Recently, in an interview with media television, the chairman of the US SEC expressed his position on the cooperation in audit regulation between the two sides. The head of the International Department of the China Securities Regulatory Commission said that he had taken note of the relevant position. "as Mr. Gensler said, the regulatory authorities of the two sides conducted a thoughtful, respectful and fruitful dialogue. Since August last year, Yi Huiman, chairman of the China Securities Regulatory Commission, and Chairman Gensler have held three video conferences to discuss how to resolve the remaining problems in Sino-US audit regulatory cooperation. "

The head of the international department of the China Securities Regulatory Commission said that the Chinese side and the US Public Company Accounting Supervisory Board (PCAOB) have held several rounds of frank, professional and efficient talks, which are progressing smoothly and the communication between the two sides will continue. Both sides are willing to resolve their differences and problems, and the final outcome depends on the wisdom and original intentions of both sides.

Another enterprise has been included in the "pre-picked list" by the SEC of the United States.

On Wednesday, local time, the Securities and Exchange Commission$Baidu, Inc. (BIDU.US) $、$Futu Holdings Limited (FUTU.US) $、$iQIYI, Inc. (IQ.US) $Kaixin Yuanda Pharmaceutical and Nocera, which is engaged in aquaculture, joined the "pre-drawn list", which is also the third batch of Chinese stocks to be added to the list since March. According to SEC, the five companies need to provide evidence to SEC by April 20 that they do not have the conditions to be delisted. If it cannot be proved, it will be included in the "confirmed delisting list".

With regard to some companies listed as delisting risks by the SEC, the CSRC said that it has learned from the US SEC that this is a normal procedure for US regulators to implement the Foreign Company Accountability Law, and whether the listed companies are really delisted in the next two years will ultimately depend on the progress and results of Sino-US audit regulatory cooperation.

In fact, the SFC's identification is a routine step implemented under published bills and rules, not an emergency, and inclusion in the interim list does not mean an immediate risk of delisting. According to the Foreign Company Accountability Act, if a listed company hires an auditor registered outside the United States, and the United States listed companies Accounting Oversight Board determines that a complete inspection or investigation cannot be carried out in its place of registration, the SFC has the responsibility to continue to identify and disclose the company. The US Securities Regulatory Commission began its formal identification work based on the 2021 annual reports disclosed by listed companies, all of which have recently published annual reports and are naturally identified in accordance with the relevant circumstances. After inclusion in the interim list, the company will not be required to delist immediately, but will continue to be inspected for three consecutive years, and may be required to delist from the United States if the conditions are not met by early 2024 (after the publication of the 2023 annual report).

At the previous special meeting of the Financial Stability and Development Committee of the State Council, he also made a clear statement on this issue. The Finance Committee said that with regard to China-listed stocks, Chinese and US regulators have maintained good communication, have made positive progress, and are working to form a concrete cooperation plan. The Chinese government continues to support all kinds of enterprises to list overseas.

Fu Tu emergency response

Futu Holdings Limited said that as a global digital financial technology company, its American depositary shares are listed and traded on the Nasdaq stock market. The company has been paying attention to the relevant requirements of the Foreign Company Accountability Act (HFCAA) of the United States and evaluating its potential impact on the company, and actively exploring ways to maintain the company's listing status.

Futu Holdings Limited was added to the HFCAA-based provisional list by the Committee of the Securities and Exchange Supervisory Association (SEC) because the audit report included in the company's recent 2021 annual report to SEC was issued by an audit institution that has not been reviewed by the U.S. Public Company Accounting Oversight Board (PCAOB). This determination is a normal step for SEC to implement HFCAA and related rules, and being on the provisional list does not mean that the company's American depositary shares will be forcibly delisted and delisted in the near future. According to HFCAA regulations, listed companies will be delisted and delisted only if they use audit institutions that have not been reviewed by PCAOB for three consecutive years. At present, Futuo is on the provisional list for the first year.

Futu Holdings Limited pointed out that the company has taken note of state media reports that relevant Chinese government departments have continued to communicate and dialogue with PCAOB and have made positive progress. Moreover, the Financial Stability and Development Committee of the State Council of China also made it clear at a recent special meeting that the Chinese government continues to support all kinds of enterprises to list overseas. The overall operation of Futu Company is stable as usual, and continues to strictly abide by and implement the relevant laws and regulations.