I 

115TH CONGRESS 

2D SESSION H. R. 7234 

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

disclose to the Securities and Exchange Commission information regarding foreign jurisdictions that prevent the Public Company Accounting 

Oversight Board from performing inspections under that Act, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 10, 2018 

Mr. CONAWAY introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

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

issuers to disclose to the Securities and Exchange Commission information regarding foreign jurisdictions that 

prevent the Public Company Accounting Oversight Board 

from performing inspections under that Act, 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 ‘‘Holding Foreign Com5 panies Accountable Act’’. 


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1 SEC. 2. DISCLOSURE REQUIREMENT. 

2 Section 104 of the Sarbanes-Oxley Act of 2002 (15 

3 U.S.C. 7214) is amended by adding at the end the fol4 lowing: 

5 ‘‘(i) DISCLOSURE REGARDING FOREIGN JURISDIC6 TIONS THAT PREVENT INSPECTIONS.— 

7 ‘‘(1) DEFINITION.—In this subsection, the term 

8 ‘covered issuer’ means an issuer that is required to 

9 file reports under section 13 or 15(d) of the Securi10 ties Exchange Act of 1934 (15 U.S.C. 78m; 78o(d)). 

11 ‘‘(2) DISCLOSURE TO COMMISSION.—The Com12 mission shall— 

13 ‘‘(A) identify each covered issuer that, with 

14 respect to the preparation of the audit report 

15 on the covered issuer’s financial statement that 

16 is included in a report described in paragraph 

17 (1) with respect to the covered issuer, retains a 

18 registered public accounting firm to issue such 

19 audit report that— 

20 ‘‘(i) is located in a foreign jurisdic21 tion; and 

22 ‘‘(ii) the Board is unable to inspect 

23 under this section because of the applica24 bility of the laws or rules of the foreign ju25 risdiction; and 


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1 ‘‘(B) require each covered issuer identified 

2 under subparagraph (A) to disclose on an an3 nual basis to the Commission, in accordance 

4 with the rules issued by the Commission under 

5 paragraph (3)— 

6 ‘‘(i) the provisions of law or rule in 

7 the jurisdiction described in subparagraph 

8 (A)(i) that prevent the Board from per9 forming an inspection under this section, 

10 as described in subparagraph (A)(ii); and 

11 ‘‘(ii) the date on which those provi12 sions of law or rule no longer prevent the 

13 Board from performing that inspection. 

14 ‘‘(3) TRADING PROHIBITION AFTER 3 YEARS OF

15 NON-INSPECTIONS.— 

16 ‘‘(A) IN GENERAL.—If the Commission de17 termines that a covered issuer has 3 consecutive 

18 non-inspection years, the Commission shall pro19 hibit the securities of the covered issuer from 

20 being traded on a national securities exchange. 

21 ‘‘(B) REMOVAL OF INITIAL PROHIBI22 TION.—If, after a prohibition required under 

23 subparagraph (A), the issuer subject to the pro24 hibition certifies to the Commission that the 

25 issuer will retain a registered public accounting 


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1 firm that the Board is able to inspect under 

2 this section, the Commission shall end the pro3 hibition imposed pursuant to subparagraph (A). 

4 ‘‘(C) RECURRENCE OF NON-INSPECTION

5 YEARS.—If, after the ending of a prohibition 

6 under subparagraph (B) or (D), the Commis7 sion determines that a covered issuer has a 

8 non-inspection year, the Commission shall pro9 hibit the securities of the covered issuer from 

10 being traded on a national securities exchange. 

11 ‘‘(D) REMOVAL OF SUBSEQUENT PROHIBI12 TION.—If, after the end of a 5-year period be13 ginning on the date of a prohibition required 

14 under subparagraph (C), the issuer subject to 

15 the prohibition certifies to the Commission that 

16 the issuer will retain a registered public ac17 counting firm that the Board is able to inspect 

18 under this section, the Commission shall end 

19 the prohibition imposed pursuant to subpara20 graph (C). 

21 ‘‘(E) NON-INSPECTION YEAR DEFINED.— 

22 For purposes of this paragraph and with re23 spect to a covered issuer, the term ‘non-inspec24 tion year’ means a year— 


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1 ‘‘(i) during which the Commission 

2 identified the covered issuer under para3 graph (2)(A) with respect to every report 

4 described in paragraph (1) filed by the cov5 ered issuer during such year; and 

6 ‘‘(ii) that begins after the date of the 

7 enactment of this subsection. 

8 ‘‘(4) RULES.—Not later than 90 days after the 

9 date of enactment of this subsection, the Commis10 sion shall issue rules that establish the manner and 

11 form in which a covered issuer shall make a disclo12 sure required under paragraph (2)(B).’’. 

Æ 


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