[Congressional Record Volume 166, Number 95 (Wednesday, May 20, 2020)]
[Senate]
[Pages S2557-S2558]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 1589. Mr. KENNEDY (for himself, Mr. Rubio, Mr. Van Hollen, Mr.
Menendez, Mr. Cramer, and Mr. Cotton) proposed an amendment to the bill
S. 945, 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; as follows:
Strike all after the enacting clause and insert the
following:
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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