[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 945 Enrolled Bill (ENR)]
S.945
One Hundred Sixteenth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Friday,
the third day of January, two thousand and twenty
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.
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.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.