Chinese companies will have to disclose more information about audits and whether they are controlled by a government or otherwise leave the U.S stock markets under a rule approved by securities regulators.
The Securities and Exchange Commission approved Thursday a rule that brings about a long-running standoff between Washington and Beijing over how much information companies with U.S.- traded shares must disclose.
Companies that used an auditor in a foreign jurisdiction will have to prove that they are not owned or controlled by a government entity there, according to the SEC. The companies will have to disclose additional information in their annual reports.
Some companies can be imposed trading prohibitions, according to the SEC.
Other governments cooperate with the U.S. demands for more financial details from companies to prevent false reporting. Beijing cites security concerns, but refuses to allow the U.S. Public Companies Accounting Oversight Board to review work of Chinese auditors.
Hundreds of Chinese companies have raised tens of billions of dollars in the U.S. financial markets, but their status is a matter of growing dispute with Beijing.
The SEC said the latest rule applies to audit firms that the PCAOB is unable to inspect or investigate, a group that would mostly be Chinese.
The US government banned Americans from investing in the stocks, bonds and other securities of Chinese companies that are believed to be linked to the ruling Communist Party's efforts to upgrade its military technology.