EQUITABLE Act

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. Short title This Act may be cited as the Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges Act EQUITABLE Act 2. Definitions In this Act— (1) the term applicable foreign issuer (A) that is required to file a covered form; and (B) for which, during the period covered by the filing described in subparagraph (A), a covered foreign public accounting firm has prepared an audit report for the issuer; (2) the term audit report 15 U.S.C. 7201(a) (3) the term Board (4) the term Commission (5) the term covered foreign public accounting firm 15 U.S.C. 7201 (6) the term covered form (A) means— (i) the form described in section 249.310 of title 17, Code of Federal Regulations, or any successor regulation; and (ii) the form described in section 249.220f of title 17, Code of Federal Regulations, or any successor regulation; and (B) includes a form that— (i) is the equivalent of, or substantially similar to, the form described in clause (i) or (ii) of subparagraph (A); and (ii) a foreign issuer files with the Commission under the Securities Exchange Act of 1934 ( 15 U.S.C. 78a (7) the term covered jurisdiction (8) the term exchange 15 U.S.C. 78a(a) (9) the term foreign issuer (10) the term foreign public accounting firm 15 U.S.C. 7216(g) (11) the term national securities exchange 15 U.S.C. 78f (12) the term public accounting firm 15 U.S.C. 7201(a) 3. Disclosure (a) List of certain foreign issuers and covered foreign public accounting firms (1) In general The Commission shall maintain a publicly available list of— (A) each foreign issuer, an audit report of which— (i) is prepared by a foreign public accounting firm; and (ii) the Board is not able to inspect or investigate because of a position taken by an authority that is outside of the United States; (B) each covered foreign public accounting firm that has prepared an audit report identified under subparagraph (A); and (C) the jurisdiction in which each covered foreign public accounting firm identified under subparagraph (B) is organized or operating. (2) Role of the Board Not less frequently than annually, the Board shall provide to the Commission the information that is required for the Commission to carry out paragraph (1). (b) Annual report disclosure (1) Disclosure Each applicable foreign issuer shall disclose in each covered form filed by the applicable foreign issuer— (A) that, during the period covered by covered form, a covered foreign public accounting firm has prepared an audit report for the issuer; (B) the percentage of the shares of the issuer owned by governmental entities in the foreign jurisdiction in which the issuer is incorporated or otherwise organized; (C) whether governmental entities in a covered jurisdiction with respect to any covered foreign public accounting firm that has prepared an audit report for the issuer during the period covered by the form have a controlling financial interest with respect to the issuer; and (D) the name of any official of the Chinese Communist Party who is a member of the board of directors of the issuer or the operating entity with respect to the issuer. (2) Update of rules Not later than 270 days after the date of enactment of this Act, and after providing the opportunity for public notice and comment, the Commission shall make any amendments to the rules of the Commission that are required as a result of the requirements of this subsection. (3) Effective date This subsection shall take effect on the date on which the Commission completes the amendments required under paragraph (2). (c) Disclosure by brokers and dealers Section 15(n) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78o(n) (1) in paragraph (1), by striking Commission may issue (A) shall issue rules that require a broker and a dealer to disclose, with respect to any advice, analysis, or report of the broker or dealer to a retail investor regarding the securities of a foreign issuer, whether a covered foreign public accounting firm has prepared an audit report for the foreign issuer; and (B) in addition to the rules required under subparagraph (A), may issue rules designating documents or information that shall be provided by a broker or dealer to a retail investor before the purchase of an investment product or service by the retail investor. ; and (2) by adding at the end the following: (4) Definitions In this subsection, the terms audit report covered foreign public accounting firm foreign issuer EQUITABLE Act . 4. Prohibition against the listing of certain firms on national securities exchanges (a) In general Section 6(b) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78f(b) (11) (A) The rules of the exchange prohibit the initial listing, after the date of enactment of this paragraph, of any security of an issuer for which a covered foreign public accounting firm has prepared an audit report. (B) Nothing in subparagraph (A) may be construed to prevent an exchange from listing a security on the exchange on or after the date of enactment of this paragraph if that security was listed on the exchange or a national securities exchange before the date of enactment of this paragraph. (C) In this paragraph, the terms audit report covered foreign public accounting firm EQUITABLE Act (12) (A) The rules of the exchange prohibit the listing of any security of a foreign issuer that, beginning in 2025, has been identified under section 3(a)(1)(A) of the EQUITABLE Act (B) Nothing in subparagraph (A) may be construed to prevent an exchange from listing a security of a foreign issuer described in that subparagraph beginning on the date on which the issuer submits to the Commission an audit report for the issuer that is prepared by a registered public accounting firm that the Public Company Accounting Oversight Board has inspected, or is able to inspect, under section 104 of the Sarbanes-Oxley Act of 2002 ( 15 U.S.C. 7214 (C) In this paragraph— (i) the terms audit report registered public accounting firm 15 U.S.C. 7201(a) (ii) the terms covered foreign public accounting firm foreign issuer EQUITABLE Act . (b) Rules (1) Proposals Not later than 90 days after the date of enactment of this Act, each national securities exchange shall, in accordance with section 19(b) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78s(b) (2) Adoption Not later than 1 year after the date of enactment of this Act, each national securities exchange shall have each proposed change described in paragraph (1) approved by the Commission.

Summary: Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges Act or the EQUITABLE Act This bill generally restricts the use of a foreign public accounting firm by a foreign issuer of securities. The bill requires certain disclosures from a foreign issuer of securities that uses, for its required audit report to the Securities and Exchange Commission (SEC), a foreign public accounting firm that is not subject to inspection by the Public Company Accounting Oversight Board. If an issuer uses such a foreign public accounting firm, the issuer is generally prohibited from listing its securities on a national securities exchange. Specifically, an issuer that is not currently listed on an exchange and uses such a firm may not be listed. A currently-listed issuer will be delisted beginning in 2025 if the issuer uses such a firm for three consecutive years.