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SEC Adopts Form Amendments to Help Registrants Comply with Holding Foreign Companies Accountable Act

The SEC adopted interim final amendments to Forms 20-F, 40-F, 10-K and/or N-CSR. The amendments apply to registrants that have to comply with disclosure and submission requirements under the Holding Foreign Companies Accountable Act ("HFCA Act").

As previously covered, the HFCA Act requires the SEC to determine whether a registered issuer has engaged an accounting firm located in a foreign jurisdiction that the Public Company Accounting Oversight Board (or "PCAOB") is not able to inspect because of a position taken by an authority in the foreign jurisdiction. In such cases, the SEC is required to obtain from the registered issuer "documentation that establishes the covered issuer is not owned or controlled by a governmental entity in the foreign jurisdiction" of the relevant accounting firm.

In the interim final rule and request for comment, the SEC stated that, although the HFCA Act does not mandate rule or form changes, amending these forms will help issuers comply with the HFCA Act. Therefore, the SEC amended its forms to:

  • reflect the disclosure requirements in Section 3 of the HFCA Act, which require SEC-registered foreign issuers to disclose, among other things:
    • the percentage of the issuer's shares owned by governmental entities in the foreign jurisdiction of the issuer;
    • whether foreign governments in the jurisdiction of the relevant accounting firm have a controlling financial interest in the issuer;
    • the names of Chinese Communist Party "officials" who are members of the board of directors, of the company, or of an operating entity with respect to the issuer; and
    • whether the issuer's articles of incorporation contain any Chinese Communist Party charter, including the text of any such charter; and
  • require all SEC-registered issuers that are "not owned or controlled by a governmental entity in the described foreign jurisdiction" to submit documentation on a supplemental basis establishing that they are not so owned or controlled.

Comments on the amendments must be submitted within 30 days of their publication in the Federal Register, which is also when the amendments will go into effect.

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