In a move aimed at reining in accounting improprieties of Chinese-based companies listed on the U.S. Stock Exchange, legislators from both parties are pushing a bill through Congress that would force foreign-based companies to submit to oversight by the U.S. Public Company Accounting Oversight Board (PCAOB).

The legislation (S.945), which proposes to amend a section of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214), unanimously passed the U.S. Senate by voice vote May 20 and is now before the House. In a sign of bipartisan support, a companion bill, filed by U.S. Rep. Brad Sherman (D-Calif.), is also awaiting action in the House.

According to the Senate legislation, called the “Holding Foreign Companies Accountable Act,” a foreign-owned company that refused to comply with the PCAOB’s audit requirements for three consecutive years could be delisted. Foreign-owned companies would also have to certify they are not owned or controlled by a foreign government.

The bill clearly targets Chinese companies. For years, the Chinese government has shielded Chinese companies listed on U.S. stock exchanges from the same audit and accounting scrutiny required of U.S. companies.

“It’s asinine that we’re giving Chinese companies the opportunity to exploit hardworking Americans—people who put their retirement and college savings in our exchanges—because we don’t insist on examining their books,” Sen. John Kennedy (R-La.), who sponsored the Senate bill with Sen. Chris Van Hollen (D-Md.), said in a statement.

U.S. legislators in both parties say Chinese companies—with Luckin Coffee and video streaming company iQIYI among the most recently scrutinized—have swindled American investors of millions of dollars by improperly inflating earnings and profits. The companies are not called to account because their books are shielded from audit scrutiny by foreign government regulators in China and Hong Kong, legislators say.

According to the PCAOB, audit firms in China and Hong Kong issued audit reports for 188 public companies in 2019, with a combined global market capitalization (U.S. and non-U.S. exchanges) of approximately $1.9 trillion. Some of the companies potentially affected include Alibaba Group and Baidu, and future listing plans of major private Chinese corporations could also be prevented.

The positions taken by regulators in China and Hong Kong “impair our ability to conduct inspections and investigations of the audits of public companies with China-based operations,” the PCAOB said, affecting two specific types of audit work: audit work performed by the principal, signing author, certifying that the audit complied with PCAOB standards; and referred work, which is signed and issued by a separate firm and made public through the PCAOB’s online database, AuditorSearch.

Should the bill become law, it would likely be at least three years before any foreign-owned company was delisted.

In a statement, the China Securities Regulatory Commission (CSRC) accused the bill’s authors of “politicizing securities regulation.”

“The proposed Act, if enacted, would certainly harm the interests of both China and the US,” the CSRC said. “While impeding foreign issuers from listing in the US, it would also undermine global investors’ confidence in the US capital markets and weaken the US markets’ international standing. Potential issuers of high quality represent valuable resources that attract competitions among capital markets around the globe. We believe international investors will make their wise choices that best suit their own interests.”

Peter Cohan, a lecturer in strategy and entrepreneurship at Babson College in Wellesley, Mass., said he did not think any Chinese companies will comply with the U.S. accounting standards so they can maintain their listing on the U.S. exchanges. Doing so would require “a huge amount of restating of financial statements and creation of auditing procedures—probably for U.S. auditing firms,” he noted.

If the bill becomes law, Cohan predicts Chinese firms would move to stock exchanges in countries that “do not require them to change their reporting processes.” Two likely landing spots are Hong Kong and London, he said.