Technology giant Baidu on Wednesday became the latest high-profile Chinese company to be warned by the Securities and Exchange Commission (SEC) of potential delisting under the Holding Foreign Companies Accountable Act (HFCAA).
Baidu was added to the agency’s HFCAA watchlist, along with online video platform iQIYI; CASI Pharmaceuticals; engineering, procurement, and construction company Nocera; and online brokerage and wealth management platform Futu Holdings Limited. In total, the SEC has so far warned 11 Chinese companies of noncompliance with the law; the agency has previously estimated nearly 300 businesses might be designated based on a review of registrants in calendar year 2020.
Under the HFCAA, China-based public companies face delisting from U.S. stock exchanges if they do not allow their audits to be inspected by the Public Company Accounting Oversight Board (PCAOB) for three consecutive years, beginning in 2021. The earliest a company could be delisted would be 2024.
Baidu is considered one of the largest artificial intelligence and internet companies in the world. Its stock trades on the Nasdaq.
Baidu in its annual report filed with the SEC on Monday acknowledged its exposure under the HFCAA and the threat of being delisted if the PCAOB is not granted access to its audits.