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The US and China reach landmark oversight agreement

The United States and China reach a landmark audit oversight agreement, halting possible delisting of Chinese companies on NY exchanges.

The China Securities Regulatory Commission, the Ministry of Finance and the US Public Company Accounting Oversight Board signed an audit oversight agreement on Friday and will advance relevant cooperation in the near future, the CSRC said in a statement.

The agreement establishes a cooperation framework in line with the authorities’ respective laws and regulatory mandates. The deal sets out specific arrangements for conducting inspections and investigations by both sides over relevant audit firms within the jurisdiction of both sides, the statement said.

“The signing of the agreement is an important step forward by regulators in China and the US towards resolving the serious audit oversight issues that concerns mutual interests. The agreement lays the foundation for proactive, professional and pragmatic cooperation in the next stage,” the statement said.

Audit work papers that the US regulator needs access to will be obtained by and transferred through the Chinese side, providing a feasible path for protecting information security while strengthening audit supervision cooperation, the officials said.

Chinese stocks in the US stock market responded positively.

Experts said that the agreement marks a significant breakthrough in resolving the audit dispute regarding US-listed Chinese companies that has exposed many of them to delisting risks.

Peng Wensheng, chief economist at China International Capital Corp, said the agreement is good news for investors and public companies.

For US-listed Chinese companies, the agreement will reduce the possibility of forced delistings and help them to get more financing from the capital market, Peng said.

“If the upcoming cooperation concludes to the satisfaction of both sides’ regulatory mandates, it is hopeful that the audit oversight issue of the US-listed Chinese companies will be resolved and delisting can be avoided,” the CSRC officials said.

Credit The Nation Thailand

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