Title: Holding Foreign Companies Accountable Act
Policy area: Finance and Financial Sector

Summary:
Holding Foreign Companies Accountable Act
This bill requires certain issuers of securities to disclose specified information to the Securities and Exchange Commission (SEC) if the issuer has used, for its required audit report to the SEC, a foreign public accounting firm that is not subject to inspection by Public Company Accounting Oversight Board. If an issuer retains such a firm for three consecutive years, the SEC shall prohibit the issuer from trading on a national securities exchange.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7234 Introduced in House (IH)]

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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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Holding Foreign Companies 
Accountable Act''.

SEC. 2. DISCLOSURE REQUIREMENT.

    Section 104 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214) is 
amended by adding at the end the following:
    ``(i) Disclosure Regarding Foreign Jurisdictions That Prevent 
Inspections.--
            ``(1) Definition.--In this subsection, the term `covered 
        issuer' means an issuer that is required to file reports under 
        section 13 or 15(d) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78m; 78o(d)).
            ``(2) Disclosure to commission.--The Commission shall--
                    ``(A) identify each covered issuer that, with 
                respect to the preparation of the audit report on the 
                covered issuer's financial statement that is included 
                in a report described in paragraph (1) with respect to 
                the covered issuer, retains a registered public 
                accounting firm to issue such audit report that--
                            ``(i) is located in a foreign jurisdiction; 
                        and
                            ``(ii) the Board is unable to inspect under 
                        this section because of the applicability of 
                        the laws or rules of the foreign jurisdiction; 
                        and
                    ``(B) require each covered issuer identified under 
                subparagraph (A) to disclose on an annual basis to the 
                Commission, in accordance with the rules issued by the 
                Commission under paragraph (3)--
                            ``(i) the provisions of law or rule in the 
                        jurisdiction described in subparagraph (A)(i) 
                        that prevent the Board from performing an 
                        inspection under this section, as described in 
                        subparagraph (A)(ii); and
                            ``(ii) the date on which those provisions 
                        of law or rule no longer prevent the Board from 
                        performing that inspection.
            ``(3) Trading prohibition after 3 years of non-
        inspections.--
                    ``(A) In general.--If the Commission determines 
                that a covered issuer has 3 consecutive non-inspection 
                years, the Commission shall prohibit the securities of 
                the covered issuer from being traded on a national 
                securities exchange.
                    ``(B) Removal of initial prohibition.--If, after a 
                prohibition required under subparagraph (A), the issuer 
                subject to the prohibition certifies to the Commission 
                that the issuer will retain a registered public 
                accounting firm that the Board is able to inspect under 
                this section, the Commission shall end the prohibition 
                imposed pursuant to subparagraph (A).
                    ``(C) Recurrence of non-inspection years.--If, 
                after the ending of a prohibition under subparagraph 
                (B) or (D), the Commission determines that a covered 
                issuer has a non-inspection year, the Commission shall 
                prohibit the securities of the covered issuer from 
                being traded on a national securities exchange.
                    ``(D) Removal of subsequent prohibition.--If, after 
                the end of a 5-year period beginning on the date of a 
                prohibition required under subparagraph (C), the issuer 
                subject to the prohibition certifies to the Commission 
                that the issuer will retain a registered public 
                accounting firm that the Board is able to inspect under 
                this section, the Commission shall end the prohibition 
                imposed pursuant to subparagraph (C).
                    ``(E) Non-inspection year defined.--For purposes of 
                this paragraph and with respect to a covered issuer, 
                the term `non-inspection year' means a year--
                            ``(i) during which the Commission 
                        identified the covered issuer under paragraph 
                        (2)(A) with respect to every report described 
                        in paragraph (1) filed by the covered issuer 
                        during such year; and
                            ``(ii) that begins after the date of the 
                        enactment of this subsection.
            ``(4) Rules.--Not later than 90 days after the date of 
        enactment of this subsection, the Commission shall issue rules 
        that establish the manner and form in which a covered issuer 
        shall make a disclosure required under paragraph (2)(B).''.
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