Chinese Social Media Platform Weibo Added to Delisting Watchlist by SEC
Beijing-based social media platform Weibo became the sixth Chinese company to be added to a delisting watchlist by the U.S. Securities and Exchange Commission (SEC) on Wednesday.
According to the official SEC website, the Weibo Corporation needs to provide evidence before April 13 to prove that it does not exhibit conditions to be delisted. Otherwise, it will be included in the “Determined Delisting List.”
On March 8, five Chinese companies including BeiGene, Yum China, Zai Lab Limited, ACM Research (Shanghai) and Hutchmed, were listed in the “pre-delisting list.” They also needed to provide the SEC with evidence before March 29.
The SEC’s move is based on the Holding Foreign Companies Accountable Act (HFCAA) passed by the U.S. Congress in December 2020. The law puts forward additional information disclosure requirements for foreign companies listed domestically: if a listed company in the country employs an accounting firm in a jurisdiction outside the U.S. to issue audit reports for it, it may be recognized by the SEC as a “Commission-Identified Issuer,” because the accounting firm cannot be reviewed by the Public Company Accounting Oversight Board (PCAOB). If a company is listed as a “recognized issuer” for three consecutive years, the SEC will prohibit the company’s shares from trading on U.S. exchanges or in other forms within the country.
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On March 11, the China Securities Regulatory Commission responded to the SEC’s identification of the above-mentioned five listed companies in the U.S. as “related issuers” with delisting risks according to the HFCAA. The Chinese regulator said this was a normal step for U.S. regulatory authorities to implement the HFCAA and related rules, stressing that China “always adheres to the spirit of openness and cooperation,” but also “resolutely opposes the wrong practice of politicizing securities supervision by some forces.”