[116th Congress Public Law 222]
[From the U.S. Government Publishing Office]
[[Page 134 STAT. 1063]]
Public Law 116-222
116th Congress
An Act
To amend the Sarbanes-Oxley Act of 2002 to require certain issuers to
disclose to the Securities and Exchange Commission information regarding
foreign jurisdictions that prevent the Public Company Accounting
Oversight Board from performing inspections under that Act, and for
other purposes. <<NOTE: Dec. 18, 2020 - [S. 945]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Holding Foreign
Companies Accountable Act.>>
SECTION 1. <<NOTE: 15 USC 7201 note.>> SHORT TITLE.
This Act may be cited as the ``Holding Foreign Companies Accountable
Act''.
SEC. 2. DISCLOSURE REQUIREMENT.
Section 104 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214) is
amended by adding at the end the following:
``(i) Disclosure Regarding Foreign Jurisdictions That Prevent
Inspections.--
``(1) Definitions.--In this subsection--
``(A) the term `covered issuer' means an issuer that
is required to file reports under section 13 or 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m,
78o(d)); and
``(B) the term `non-inspection year' means, with
respect to a covered issuer, a year--
``(i) during which the Commission identifies
the covered issuer under paragraph (2)(A) with
respect to every report described in subparagraph
(A) filed by the covered issuer during that year;
and
``(ii) that begins after the date of enactment
of this subsection.
``(2) Disclosure to commission.--The Commission shall--
``(A) identify each covered issuer that, with
respect to the preparation of the audit report on the
financial statement of the covered issuer that is
included in a report described in paragraph (1)(A) filed
by the covered issuer, retains a registered public
accounting firm that has a branch or office that--
``(i) is located in a foreign jurisdiction;
and
``(ii) the Board is unable to inspect or
investigate completely because of a position taken
by an authority in the foreign jurisdiction
described in clause (i), as determined by the
Board; and
``(B) <<NOTE: Records.>> require each covered
issuer identified under subparagraph (A) to, in
accordance with the rules issued by the Commission under
paragraph (4), submit to the
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Commission documentation that establishes that the
covered issuer is not owned or controlled by a
governmental entity in the foreign jurisdiction
described in subparagraph (A)(i).
``(3) <<NOTE: Determinations. Certifications.>> Trading
prohibition after 3 years of non-inspections.--
``(A) In general.--If the Commission determines that
a covered issuer has 3 consecutive non-inspection years,
the Commission shall prohibit the securities of the
covered issuer from being traded--
``(i) on a national securities exchange; or
``(ii) through any other method that is within
the jurisdiction of the Commission to regulate,
including through the method of trading that is
commonly referred to as the `over-the-counter'
trading of securities.
``(B) Removal of initial prohibition.--If, after the
Commission imposes a prohibition on a covered issuer
under subparagraph (A), the covered issuer certifies to
the Commission that the covered issuer has retained a
registered public accounting firm that the Board has
inspected under this section to the satisfaction of the
Commission, the Commission shall end that prohibition.
``(C) Recurrence of non-inspection years.--If, after
the Commission ends a prohibition under subparagraph (B)
or (D) with respect to a covered issuer, the Commission
determines that the covered issuer has a non-inspection
year, the Commission shall prohibit the securities of
the covered issuer from being traded--
``(i) on a national securities exchange; or
``(ii) through any other method that is within
the jurisdiction of the Commission to regulate,
including through the method of trading that is
commonly referred to as the `over-the-counter'
trading of securities.
``(D) <<NOTE: Time period.>> Removal of subsequent
prohibition.--If, after the end of the 5-year period
beginning on the date on which the Commission imposes a
prohibition on a covered issuer under subparagraph (C),
the covered issuer certifies to the Commission that the
covered issuer will retain a registered public
accounting firm that the Board is able to inspect under
this section, the Commission shall end that prohibition.
``(4) <<NOTE: Deadline.>> Rules.--Not later than 90 days
after the date of enactment of this subsection, the Commission
shall issue rules that establish the manner and form in which a
covered issuer shall make a submission required under paragraph
(2)(B).''.
SEC. 3. <<NOTE: 15 USC 7214a.>> ADDITIONAL DISCLOSURE.
(a) Definitions.--In this section--
(1) the term ``audit report'' has the meaning given the term
in section 2(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7201(a));
(2) the term ``Commission'' means the Securities and
Exchange Commission;
(3) the term ``covered form''--
(A) means--
[[Page 134 STAT. 1065]]
(i) the form described in section 249.310 of
title 17, Code of Federal Regulations, or any
successor regulation; and
(ii) the form described in section 249.220f of
title 17, Code of Federal Regulations, or any
successor regulation; and
(B) includes a form that--
(i) is the equivalent of, or substantially
similar to, the form described in clause (i) or
(ii) of subparagraph (A); and
(ii) a foreign issuer files with the
Commission under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.) or rules issued under
that Act;
(4) the terms ``covered issuer'' and ``non-inspection year''
have the meanings given the terms in subsection (i)(1) of
section 104 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214),
as added by section 2 of this Act; and
(5) the term ``foreign issuer'' has the meaning given the
term in section 240.3b-4 of title 17, Code of Federal
Regulations, or any successor regulation.
(b) Requirement.--Each covered issuer that is a foreign issuer and
for which, during a non-inspection year with respect to the covered
issuer, a registered public accounting firm described in subsection
(i)(2)(A) of section 104 of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7214), as added by section 2 of this Act, has prepared an audit report
shall disclose in each covered form filed by that issuer that covers
such a non-inspection year--
(1) that, during the period covered by the covered form,
such a registered public accounting firm has prepared an audit
report for the issuer;
(2) the percentage of the shares of the issuer owned by
governmental entities in the foreign jurisdiction in which the
issuer is incorporated or otherwise organized;
(3) whether governmental entities in the applicable foreign
jurisdiction with respect to that registered public accounting
firm have a controlling financial interest with respect to the
issuer;
(4) the name of each official of the Chinese Communist Party
who is a member of the board of directors of--
(A) the issuer; or
(B) the operating entity with respect to the issuer;
and
(5) whether the articles of incorporation of the issuer (or
equivalent organizing document) contains any charter of the
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Chinese Communist Party, including the text of any such charter.
Approved December 18, 2020.
LEGISLATIVE HISTORY--S. 945:
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CONGRESSIONAL RECORD, Vol. 166 (2020):
May 20, considered and passed Senate.
Dec. 2, considered and passed House.
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