In December 2020, Congress enacted the Holding Foreign Companies Accountable (HFCA) Act, and the SEC released interim final amendments that begin to address the components of this Act.
In November 2021, the SEC approved PCAOB Rule 6100 which establishes a process for determining which registered public accounting firms the board is unable to inspect or investigate completely.
In December 2021, the SEC adopted amendments to finalize its rules under the HFCA Act that set forth submission and disclosure requirements for commission-identified issuers identified under the Act, specify the processes by which the SEC will identify and notify Commission-Identified Issuers, and implement trading prohibitions after three consecutive years of identification.
1. The SEC has issued a Fact Sheet summarizing the key provisions of the rules.
2. Among other things, the final rules under the HFCA Act require the SEC to:
3. Commission-Identified Issuers are determined on the following basis:
4. For each non-inspection year, Commission-Identified Issuers will be required to comply with the following submission and/or disclosure requirements in the final rule:
5. Additionally, if an issuer is determined to be a Commission-Identified Issuer for three consecutive years, the HFCA Act includes a directive for the SEC to prohibit trading in its securities.
6. In June 2021, the US Senate passed S. 2184, the Accelerating Holding Foreign Companies Accountable Act which, if enacted, would reduce the time period for delisting under the HFCA Act to two years instead of three years. This pending legislation has not yet been taken up for consideration and vote in the US House of Representatives.