Washington, May 22: In a major move, the US Senate overwhelmingly approved legislation Wednesday that could lead atleast 800 Chinese companies such as Alibaba Group Holding Ltd. and Baidu Inc. to be barred from listing on American stock exchanges amid increasingly tense relations between the world's two largest economies.
The bill called the Holding Foreign Companies Accountable Act, introduced by Senator John Kennedy, a Republican from Louisiana, and Chris Van Hollen, a Democrat from Maryland, was approved by unanimous consent. The bill was first introduced in March 2019.
Before becoming a law, it has to be approved by the House of Representatives and be signed off by President Donald Trump.
According to the bill, the companies would have to certify that they are not under the control of a foreign government.
This bill requires certain issuers of securities to establish that they are not owned or controlled by a foreign government. Specifically, an issuer must make this certification if the Public Company Accounting Oversight Board is unable to audit specified reports because the issuer has retained a foreign public accounting firm not subject to inspection by the board.
Furthermore, if the board is unable to inspect the issuer's public accounting firm for three consecutive years, the issuer's securities are banned from trade on a national exchange.
US President Donald Trump and other officials in his administration had insisted that China mishandled the coronavirus during the early weeks of an outbreak that has spread into a global pandemic that has killed more than 320,000 people.
In 2019, the US-China Economic and Security Review Commission in a report said that at least 156 Chinese companies that are currently listed on the biggest three US stock exchanges. The list also includes giants like Alibaba (BABA), Baidu (BIDU) and JD.com (JD) , all of which could be at risk of being delisted if this legislation were to pass.