If the Public Company Accounting Oversight Board is not able to audit the company for three consecutive years to determine that it is not under the control of a foreign government, the company's securities would be banned from the exchange.
Exchange-traded funds that allow investors to bet on Chinese companies were knocked lower midday Wednesday after the U.S. Senate approved sweeping new legislation that could ultimately bar many Chinese companies from listing shares on U.S. exchanges.
Under the bill, companies would also be required to submit to an audit that can be reviewed by the PCAOB (Public Company Accounting Oversight Board) - which is now unable to audit the accounts of companies registered in China.
The Trump administration supported increasing accountability of Chinese companies. However, it must pass the House of Representatives and be signed by President Donald Trump to become law.
"Our basic judgement is, if it's a good company, there are many options for places to list". "We can't let foreign threats to Americas' retirement funds take root in our exchanges", Bloomberg reported Kennedy as saying.More news: Inflation rises in Nigeria for 8th straight month
Companies including Alibaba and Baidu raising billions of dollars selling shares in American markets has recently been added to the long-simmering feud. Nasdaq this week moved to delist Luckin Coffee.
What does this mean for Chinese companies?
The Holding Foreign Companies Accountable Act, sponsored by Sens.
The scandal-hit firm has said it has been co-operating with regulators in the U.S. and China, who have begun an investigation into the company.
For Chinese ADR firms with small market caps, Pang added, the best idea would be a voluntary delisting from the USA exchange before a primary listing in Hong Kong.More news: Osaka named richest female athlete in the world
"I would not turn my back on the Chinese Communist Party if they were two days dead", Kennedy said.
Around 95 per cent of them were based in mainland China or Hong Kong.
Alarms have been raised by United States lawmakers that billions of dollars have been flowing into some of China's largest corporations and that much of it is from pension funds and college endowments.
Chinese Renaissance estimated that 36 Chinese firms now listed on USA exchanges would qualify for a secondary listing in Hong Kong.
However, departing USA exchanges could hurt the prestige and "brand" of some Chinese firms. "The Chinese government forbids that kind of transparency".More news: Pakistan not using England tour as leverage, says PCB CEO