Chinese securities regulator denies report of delisting survival plan

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A China Securities Regulatory Commission sign is seen at the regulator’s headquarters on November 16, 2020 in Beijing.

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BEIJING — China’s securities regulator told CNBC in a statement it has not considered a plan for a three-tier system to help Chinese companies avoid U.S. delisting.

The Financial Times reported, citing sources, that China is preparing a system to separate Chinese companies listed in the United States into three groups based on their level of data sensitivity. The report said the system would help some Chinese companies comply with US requirements to be able to inspect audit documents.

The China Securities Regulatory Commission added that companies should comply with data security and listing rules whether they are made public on the mainland or abroad. The regulator said further information on ongoing discussions with US regulators is expected to come from official announcements.

Regulators in Washington and Beijing are scrambling to resolve an audit dispute that has threatened U.S.-listed Chinese companies with delisting.

Since March, the United States Securities and Exchange Commission has named specific Chinese stocks listed in the United States that do not comply with the Foreign Corporate Liability Act. Passed in 2020, the law would allow the SEC to delist Chinese companies from US stock exchanges if US regulators cannot review companies’ audits for three consecutive years.

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