II 

116TH CONGRESS 

1ST SESSION S. 1731 

To amend the Sarbanes-Oxley Act of 2002 to require the Public Company 

Accounting Oversight Board to maintain a list of certain foreign issuers, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 5, 2019 

Mr. RUBIO (for himself, Mr. MENENDEZ, Mr. COTTON, and Mrs. GILLIBRAND) introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Sarbanes-Oxley Act of 2002 to require the 

Public Company Accounting Oversight Board to maintain 

a list of certain foreign issuers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Ensuring Quality In5 formation and Transparency for Abroad-Based Listings 

6 on our Exchanges Act’’ or the ‘‘EQUITABLE Act’’. 

7 SEC. 2. DEFINITIONS. 

8 In this Act— 


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1 (1) the term ‘‘applicable foreign issuer’’ means 

2 a foreign issuer— 

3 (A) that is required to file a covered form; 

4 and 

5 (B) for which, during the period covered 

6 by the filing described in subparagraph (A), a 

7 covered foreign public accounting firm has pre8 pared an audit report for the issuer; 

9 (2) the term ‘‘audit report’’ has the meaning 

10 given the term in section 2(a) of the Sarbanes-Oxley 

11 Act of 2002 (15 U.S.C. 7201(a)); 

12 (3) the term ‘‘Board’’ means the Public Com13 pany Accounting Oversight Board; 

14 (4) the term ‘‘Commission’’ means the Securi15 ties and Exchange Commission; 

16 (5) the term ‘‘covered foreign public accounting 

17 firm’’ means a foreign public accounting firm that 

18 the Board is unable to inspect or investigate under 

19 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et 

20 seq.) because of a position taken by an authority 

21 outside of the United States; 

22 (6) the term ‘‘covered form’’— 

23 (A) means— 


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1 (i) the form described in section 

2 249.310 of title 17, Code of Federal Regu3 lations, or any successor regulation; and 

4 (ii) the form described in section 

5 249.220f of title 17, Code of Federal Reg6 ulations, or any successor regulation; and 

7 (B) includes a form that— 

8 (i) is the equivalent of, or substan9 tially similar to, the form described in 

10 clause (i) or (ii) of subparagraph (A); and 

11 (ii) a foreign issuer files with the 

12 Commission under the Securities Exchange 

13 Act of 1934 (15 U.S.C. 78a et seq.) or 

14 rules issued under that Act; 

15 (7) the term ‘‘covered jurisdiction’’ means the 

16 foreign jurisdiction in which the position described 

17 in paragraph (5) is taken with respect to a covered 

18 foreign public accounting firm that prepares an 

19 audit report for an applicable foreign issuer; 

20 (8) the term ‘‘exchange’’ has the meaning given 

21 the term in section 3(a) of the Securities Exchange 

22 Act of 1934 (15 U.S.C. 78a(a)); 

23 (9) the term ‘‘foreign issuer’’ has the meaning 

24 given the term in section 240.3b–4 of title 17, Code 

25 of Federal Regulations, or any successor regulation; 


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1 (10) the term ‘‘foreign public accounting firm’’ 

2 has the meaning given the term in section 106(g) of 

3 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 

4 7216(g)); 

5 (11) the term ‘‘national securities exchange’’ 

6 means an exchange that is registered with the Com7 mission under section 6 of the Securities Exchange 

8 Act of 1934 (15 U.S.C. 78f); and 

9 (12) the term ‘‘public accounting firm’’ has the 

10 meaning given the term in section 2(a) of the Sar11 banes-Oxley Act of 2002 (15 U.S.C. 7201(a)). 

12 SEC. 3. DISCLOSURE. 

13 (a) LIST OF CERTAIN FOREIGN ISSUERS AND COV14 ERED FOREIGN PUBLIC ACCOUNTING FIRMS.— 

15 (1) IN GENERAL.—The Commission shall main16 tain a publicly available list of— 

17 (A) each foreign issuer, an audit report of 

18 which— 

19 (i) is prepared by a foreign public ac20 counting firm; and 

21 (ii) the Board is not able to inspect or 

22 investigate because of a position taken by 

23 an authority that is outside of the United 

24 States; 


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1 (B) each covered foreign public accounting 

2 firm that has prepared an audit report identi3 fied under subparagraph (A); and 

4 (C) the jurisdiction in which each covered 

5 foreign public accounting firm identified under 

6 subparagraph (B) is organized or operating. 

7 (2) ROLE OF THE BOARD.—Not less frequently 

8 than annually, the Board shall provide to the Com9 mission the information that is required for the 

10 Commission to carry out paragraph (1). 

11 (b) ANNUAL REPORT DISCLOSURE.— 

12 (1) DISCLOSURE.—Each applicable foreign 

13 issuer shall disclose in each covered form filed by the 

14 applicable foreign issuer— 

15 (A) that, during the period covered by cov16 ered form, a covered foreign public accounting 

17 firm has prepared an audit report for the 

18 issuer; 

19 (B) the percentage of the shares of the 

20 issuer owned by governmental entities in the 

21 foreign jurisdiction in which the issuer is incor22 porated or otherwise organized; 

23 (C) whether governmental entities in a cov24 ered jurisdiction with respect to any covered 

25 foreign public accounting firm that has preVerDate Sep 11 2014 22:03 Jun 12, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1731.IS S1731

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1 pared an audit report for the issuer during the 

2 period covered by the form have a controlling fi3 nancial interest with respect to the issuer; and 

4 (D) the name of any official of the Chinese 

5 Communist Party who is a member of the 

6 board of directors of the issuer or the operating 

7 entity with respect to the issuer. 

8 (2) UPDATE OF RULES.—Not later than 270 

9 days after the date of enactment of this Act, and 

10 after providing the opportunity for public notice and 

11 comment, the Commission shall make any amend12 ments to the rules of the Commission that are re13 quired as a result of the requirements of this sub14 section. 

15 (3) EFFECTIVE DATE.—This subsection shall 

16 take effect on the date on which the Commission 

17 completes the amendments required under para18 graph (2). 

19 (c) DISCLOSURE BY BROKERS AND DEALERS.—Sec20 tion 15(n) of the Securities Exchange Act of 1934 (15 

21 U.S.C. 78o(n)) is amended— 

22 (1) in paragraph (1), by striking ‘‘Commission 

23 may issue’’ and all that follows through the period 

24 at the end and inserting the following: ‘‘Commis25 sion— 


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1 ‘‘(A) shall issue rules that require a broker 

2 and a dealer to disclose, with respect to any ad3 vice, analysis, or report of the broker or dealer 

4 to a retail investor regarding the securities of a 

5 foreign issuer, whether a covered foreign public 

6 accounting firm has prepared an audit report 

7 for the foreign issuer; and 

8 ‘‘(B) in addition to the rules required 

9 under subparagraph (A), may issue rules desig10 nating documents or information that shall be 

11 provided by a broker or dealer to a retail inves12 tor before the purchase of an investment prod13 uct or service by the retail investor.’’; and 

14 (2) by adding at the end the following: 

15 ‘‘(4) DEFINITIONS.—In this subsection, the 

16 terms ‘audit report’, ‘covered foreign public account17 ing firm’, and ‘foreign issuer’ have the meanings 

18 given the terms in section 2 of the EQUITABLE 

19 Act.’’. 

20 SEC. 4. PROHIBITION AGAINST THE LISTING OF CERTAIN 

21 FIRMS ON NATIONAL SECURITIES EX22 CHANGES. 

23 (a) IN GENERAL.—Section 6(b) of the Securities Ex24 change Act of 1934 (15 U.S.C. 78f(b)) is amended by add25 ing at the end the following: 


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1 ‘‘(11)(A) The rules of the exchange prohibit the 

2 initial listing, after the date of enactment of this 

3 paragraph, of any security of an issuer for which a 

4 covered foreign public accounting firm has prepared 

5 an audit report. 

6 ‘‘(B) Nothing in subparagraph (A) may be con7 strued to prevent an exchange from listing a security 

8 on the exchange on or after the date of enactment 

9 of this paragraph if that security was listed on the 

10 exchange or a national securities exchange before 

11 the date of enactment of this paragraph. 

12 ‘‘(C) In this paragraph, the terms ‘audit report’ 

13 and ‘covered foreign public accounting firm’ have the 

14 meanings given the terms in section 2 of the EQUI15 TABLE Act. 

16 ‘‘(12)(A) The rules of the exchange prohibit the 

17 listing of any security of a foreign issuer that, begin18 ning in 2025, has been identified under section 

19 3(a)(1)(A) of the EQUITABLE Act in 3 consecutive 

20 years. 

21 ‘‘(B) Nothing in subparagraph (A) may be con22 strued to prevent an exchange from listing a security 

23 of a foreign issuer described in that subparagraph 

24 beginning on the date on which the issuer submits 

25 to the Commission an audit report for the issuer 


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1 that is prepared by a registered public accounting 

2 firm that the Public Company Accounting Oversight 

3 Board has inspected, or is able to inspect, under sec4 tion 104 of the Sarbanes-Oxley Act of 2002 (15 

5 U.S.C. 7214). 

6 ‘‘(C) In this paragraph— 

7 ‘‘(i) the terms ‘audit report’ and ‘reg8 istered public accounting firm’ have the mean9 ings given the terms in section 2(a) of the Sar10 banes-Oxley Act of 2002 (15 U.S.C. 7201(a)); 

11 and 

12 ‘‘(ii) the terms ‘covered foreign public ac13 counting firm’ and ‘foreign issuer’ have the 

14 meanings given the terms in section 2 of the 

15 EQUITABLE Act.’’. 

16 (b) RULES.— 

17 (1) PROPOSALS.—Not later than 90 days after 

18 the date of enactment of this Act, each national se19 curities exchange shall, in accordance with section 

20 19(b) of the Securities Exchange Act of 1934 (15 

21 U.S.C. 78s(b)) and any rules prescribed by the Com22 mission under that section, file with the Commission 

23 any proposed change to the rules of the exchange 

24 that is required as a result of the amendments made 

25 by this section. 


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1 (2) ADOPTION.—Not later than 1 year after the 

2 date of enactment of this Act, each national securi3 ties exchange shall have each proposed change de4 scribed in paragraph (1) approved by the Commis5 sion. 

Æ 


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