The world’s second-largest producer of alumina is one of several state-owned companies from the People’s Republic of China that has voluntarily delisted from the New York Stock Exchange due to a disagreement over auditing standards.
Aluminium Corporation of China (Chalco) said last week that it would apply for delisting its American Depository Shares by month’s end. The other firms, namely China Life Insurance, Sinopec, PetroChina, and Sinopec Shanghai Petrochemical, plan to remain listed on the Hong Kong and Chinese stock exchanges.
The delisting is part of a wider dispute between Beijing and Washington, D.C. over auditing standards. The lengthy disagreement springs from the United States’ demand to see the full financial details of Chinese firms that are listed on American stock exchanges.
Although the matter had been a bone of contention for over a decade, the United States ultimately forced the question in December with the passage of the Holding Foreign Companies Accountable Act. The rules promulgated under the act could potentially prohibit trading of shares of Chinese companies due to auditing standards.
Per the Securities and Exchange Commission, almost 300 Chinese companies may face delisting from American stock exchanges unless they open their books to regulators.
The Securities and Exchange Commission determined this spring that the Chinese firms above are some of several whose auditing procedures are below American standards. Chinese companies have pushed back against demands to see financial details by claiming that to do so would jeopardize national security.
The China Securities Regulatory Commission (CSRC) insists that the foreign firms have lived up to the letter of the law thus far.
“These companies have strictly complied with the rules and regulatory requirements of the U.S. capital market since their listing in the U.S. and made the delisting choice for their own business considerations.”
The CSRC went on to say that it would keep “communication open with relevant overseas regulatory agencies.”
When reached for comment, neither the NYSE nor the Public Company Accounting Oversight Board (PCAOB), which is overseen by the SEC, opted to defer.