[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7000 Introduced in House (IH)]
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116th CONGRESS
2d Session
H. R. 7000
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 22, 2020
Mr. Sherman introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. 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) require each covered issuer identified under
subparagraph (A) to, in accordance with the rules
issued by the Commission under paragraph (4), submit to
the 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) 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) 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) 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. 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--
(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
Chinese Communist Party, including the text of any such
charter.
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