Washington, Jun 6 (PTI) A bipartisan legislation was introduced in the Congress which will increase oversight of Chinese and other foreign firms listed on US exchanges and allow delisting those companies who do not comply with the regulations.

A bipartisan group of four powerful Senators introduced the legislation in the Senate on Wednesday while another group of three US Representatives tabled the companion bill in the US House of Representatives.

The legislation--Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (EQUITABLE) Act--will force the Chinese government, which currently blocks US regulators from viewing the full audit reports of publicly traded companies headquartered in Hong Kong and mainland China, to change behaviour, the lawmakers said in a joint statement.

It will better inform investors about their exposure to financial risks, delist non-compliant issuers of securities, and ban Chinese and other foreign firms that flaunt investor protection and regulatory norms from entering the US capital markets, the statement said.

According to the US-China Economic and Security Review Commission there are 156 Chinese companies, including 11 state-owned-enterprises, that are listed on America's three largest exchanges with a combined market capitalisation of USD 1.2 trillion.

"The Chinese Communist government consistently manipulates the law and our regulations to protect their companies from being held to basic global accounting standards, creating unfair advantages and further encouraging corrupt behaviour," Republican Representative from Texas Mike Conaway said.

The EQUITABLE Act is simple: any Chinese company who wishes to be listed on the US stock exchanges, or access US capital, should be required to comply with the US laws on financial transparency, he said.

"Beijing shows no apprehension while obstructing attempts to audit Chinese companies or breaking US laws. Without the EQUITABLE Act, the Chinese government will only escalate this malicious pattern of conduct," Conaway said.

Republican Senator Marco Rubio said Beijing should no longer be allowed to shield the US-listed Chinese companies from complying with American laws and regulations for financial transparency and accountability.

"If China-based companies want to list on stock exchanges or access capital markets in the US, we should make them comply with American laws," he said.

The EQUITABLE Act makes it clear that there is a price for the Chinese government and Communist Party's disregard for the rules of responsible economic and financial engagement in international capital markets, Rubio said.

Democrat Senator Robert Menendez demanded that it's time for China's government and companies to play by the same rules as American companies in US financial markets. The new legislation would ensure that foreign companies comply with the US accounting regulations.

"This will stop Chinese firms from hiding behind the Communist Party's efforts to take advantage of our capital markets by withholding accounting information. US investors trust that both foreign and domestic publicly-listed firms are held to the same standard – and the EQUITABLE Act will make it so," Menendez said.

Republican Senator Tom Cotton alleged the Chinese Communist Party shields its prized companies from financial audits and accountability, yet the US still allows those companies to be traded on the US stock exchanges.

"If foreign companies want to stay on American exchanges, they need to abide by the same rules everyone else does. Our bill would ensure that foreign companies traded on US stock exchanges provide regulators with information already required by law," he said.

"Chinese firms should not be allowed to play by a different set of rules than American companies, yet they are currently allowed to operate on our stock exchanges without the same oversight that the US companies have to comply with," New York Democratic Senator Kirsten Gillibrand said.

Americans deserve full transparency about the companies listed on the US stock exchanges, she asserted.

"If China refuses to comply with international norms of transparency, then its companies should not have access to the US market," she said.

If Chinese companies, or any other foreign firm, want to list on the US stock exchange, they need to follow US financial laws, demanded Democrat Representative Tim Ryan.

The Chinese government's continued attempts to undermine US laws is appalling and displays a pattern of disrespect to the US. Congress needs to put an end to this, he said.

In December 2018, the Securities and Exchange Commission and the Public Company Accounting Oversight Board (PCAOB) issued a joint warning to investors about the challenges American regulators face when attempting to conduct oversight of US-listed companies whose operations are based in China and Hong Kong.

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