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Holding Foreign Companies Accountable Act Signed into Law

December 30, 2020

The Holding Foreign Companies Accountable Act (Act), which was signed into law by President Trump on December 18, 2020, amends the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and requires the Securities and Exchange Commission (SEC) to identify reporting public companies using registered public accounting firms located in a foreign country that prevents the Public Company Accounting Oversight Board (PCAOB) from auditing the accounting firm and to prohibit trading of securities of such public companies in U.S. markets after three consecutive non-inspection years. The Act also imposes additional public disclosure obligations on foreign issuers subject to the Act. 

More specifically, the Act imposes the following requirements on the SEC and covered issuers:

According to a statement issued on December 18, 2020, the day the Act was signed by President Trump, SEC Chairman Jay Clayton has directed the SEC staff, in view of the "substantial overlap" of the Act and recommendations made by the President's Working Group on Financial Markets in its July 2020 Report on Protecting United States Investors from Significant Risks from Chinese Companies (PWG Report), "to consider providing a single consolidated proposal for the Commission's consideration on issues related to the PCAOB's access to audit work papers, exchange listing standards, and trading prohibitions." The SEC Chairman has also asked the staff "to consider additional issues relating to the Act's implementation, including how the Act's disclosure requirements can be implemented expeditiously and how any actual or perceived uncertainty can be addressed in a manner consistent with congressional intent as well as investor protection and the fair and orderly operation of our markets."

This Act is one of a series of measures passed by the Trump administration focusing on financial investment links between U.S. and China. Last month, President Trump issued an executive order prohibiting American investment in Chinese military companies. For details, see our previous alert available at And last week, the U.S. Department of Commerce Bureau of Industry and Security (BIS) issued the Military End User List providing a "first tranche" of over 100 designated military end users from China and Russia for restricting exports to the two countries. For details, see our previous alert available at

The Act is available at If you have any questions about the Act, please contact the authors or your Miller Canfield attorney.