The Securities and Exchange Commission (the “SEC”) has adopted interim final amendments (the “Amendments”) to Forms 20-F, 40-F, 10-K, and NCSR to implement the disclosure and submission requirements of the Holding Foreign Companies Accountable Act (“HFCAA”).
The HFCAA was signed into law on December 18, 2020, which, among other things, amended Section 104 of the Sarbanes-Oxley Act of 2002 to impose certain requirements on a public company identified by the SEC as a “Covered Issuer” that has retained a registered public accounting firm to issue an audit report where that firm has a branch or office located in a foreign jurisdiction and the Public Company Accounting Oversight Board (the “PCAOB”) is “unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction.”
The amendments would require:
an SEC-identified Covered Issuer, which is not owned or controlled by a governmental entity in the covered foreign jurisdiction, to electronically submit documentation to the SEC on a supplemental basis that establishes that the registrant is not so owned or controlled;
an SEC-identified Issuer to make certain additional disclosures, such as:
For the immediately preceding annual financial statement period, a registered public accounting firm issued an audit report for the issuer;
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;
Whether government entities in the applicable foreign jurisdiction with respect to that registered public accounting firm have a controlling financial interest with respect to the issuer;
The name of each official of the Chinese Communist Party (“CCP”) who is a member of the board of directors of the issuer or the operating entity with respect to the issuer; and
Whether the organizing document of the issuer contains any charter of the CCP, including the text of any such charter.
An issuer will not be required to comply with either the submission or the disclosure requirements until after the SEC identifies it as a “Covered Issuer”.
The Amendments become effective 30 days after publication in the Federal Register and comments on the Amendments are due by the same date.