Holding China Accountable Act

Bill: 116-hr-7181
Sponsor: full_name: Rep. Nunes, Devin [R-CA-22]
Introduced: 2020-06-11
Policy area: Finance and Financial Sector
Subjects: Accounting and auditing

Administrative law and regulatory procedures

Asia

Banking and financial institutions regulation

Business records

China

Computer security and identity theft

Congressional oversight

Cultural exchanges and relations

Education programs funding

Financial services and investments

Foreign and international corporations

Government information and archives

Higher education

Intellectual property

International exchange and broadcasting

Iran

Middle East

North Korea

Political parties and affiliation

Russia

Science and engineering education

Securities

Securities and Exchange Commission (SEC)

Trade secrets and economic espionage

U.S. and foreign investments

Visas and passports
Latest action: action_date: 2020-06-11
text: Referred to the Committee on Financial Services, and in addition to the Committees on the Judiciary, and Education and Labor, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Summaries:
action_date: 2020-06-11
action_desc: Introduced in House
text: <p><b>Holding China Accountable Act </b></p> <p>This bill prohibits certain Chinese nationals from receiving visas, requires higher education institutions to disclose certain foreign gifts, and restricts the use of foreign public accounting firms by foreign issuers of securities. </p> <p>Specified visas may not be issued to Chinese nationals seeking to enter the United States for the purpose of (1) studying science, technology, engineering, mathematics, or a related field; (2) employment in science, technology, engineering, mathematics, or a related field; or (3) attending a business meeting, conference, or academic or cultural exchange that includes activities related to science, technology, engineering, mathematics, or a related field. </p> <p>The bill also lowers the disclosure threshold regarding gifts to higher education institutions from China, Russia, Iran, and North Korea. </p> <p>Additionally, the bill requires certain disclosures from foreign issuers of securities that use, for the required audit report to the Securities and Exchange Commission, 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. </p>

tv_txt: I 116th CONGRESS 2d Session H. R. 7181 IN THE HOUSE OF REPRESENTATIVES June 11, 2020 Mr. Nunes (for himself, Mr. Conaway , Mr. Crawford , Mr. Turner , Mr. Stewart , Ms. Stefanik , Mr. Wenstrup , Mr. Calvert , Mr. Marshall , Mr. Gibbs , Mr. Gaetz , Mr. Wilson of South Carolina , Mr. Holding , Mr. Collins of Georgia , Mr. Diaz-Balart , Mr. Garcia of California , Mr. Cook , Mr. Kustoff of Tennessee , Mr. McClintock , Mr. Bishop of North Carolina , Mr. Spano , Mr. Brooks of Alabama , and Mr. Rouzer ) introduced the following bill; which was referred to the Committee on Financial Services , and in addition to the Committees on the Judiciary , and Education and Labor , for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 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, to prohibit certain nationals of the People’s Republic of China from receiving nonimmigrant visas, and for other purposes.

1. Short title This Act may be cited as the Holding China Accountable Act . 2. Disclosures and prohibition against the listing of certain firms on national securities exchanges (a) Disclosure (1) List of certain foreign issuers and covered foreign public accounting firms (A) In general The Commission shall maintain a publicly available list of— (i) 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; (ii) each covered foreign public accounting firm that has prepared an audit report identified under clause (i); and (iii) the jurisdiction in which each covered foreign public accounting firm identified under clause (ii) is organized or operating. (B) 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 subparagraph (A). (2) Annual report disclosure (A) Disclosure Each applicable foreign issuer shall disclose in each covered form filed by the applicable foreign issuer— (i) that, during the period covered by covered form, a covered foreign public accounting firm has prepared an audit report for the issuer; (ii) 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; (iii) 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 (iv) 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. (B) 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. (C) Effective date This subsection shall take effect on the date on which the Commission completes the amendments required under subparagraph (B). (3) Disclosure by brokers and dealers Section 15(n) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78o(n) ) is amended— (A) in paragraph (1), by striking Commission may issue and all that follows through the period at the end and inserting the following: “Commission— (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 (B) by adding at the end the following: (4) Definitions In this subsection, the terms audit report , covered foreign public accounting firm , and foreign issuer have the meanings given the terms in section 2 of the EQUITABLE Act . . (b) Prohibition against the listing of certain firms on national securities exchanges (1) In general Section 6(b) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78f(b) ) is amended by adding at the end the following: (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 and covered foreign public accounting firm have the meanings given the terms in section 2 of the 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 in 3 consecutive years. (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 and registered public accounting firm have the meanings given the terms in section 2(a) of the Sarbanes-Oxley Act of 2002 ( 15 U.S.C. 7201(a) ); and (ii) the terms covered foreign public accounting firm and foreign issuer have the meanings given the terms in section 2 of the EQUITABLE Act . . (2) Rules (A) 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) ) and any rules prescribed by the Commission under that section, file with the Commission any proposed change to the rules of the exchange that is required as a result of the amendments made by this section. (B) 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. (c) Definitions In this section— (1) the term applicable foreign issuer means a 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 has the meaning given the term in section 2(a) of the Sarbanes-Oxley Act of 2002 ( 15 U.S.C. 7201(a) ); (3) the term Board means the Public Company Accounting Oversight Board; (4) the term Commission means the Securities and Exchange Commission; (5) the term covered foreign public accounting firm means a foreign public accounting firm that the Board is unable to inspect or investigate under the Sarbanes-Oxley Act of 2002 ( 15 U.S.C. 7201 et seq.) because of a position taken by an authority outside of the United States; (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 et seq.) or rules issued under that Act; (7) the term covered jurisdiction means the foreign jurisdiction in which the position described in paragraph (5) is taken with respect to a covered foreign public accounting firm that prepares an audit report for an applicable foreign issuer; (8) the term exchange has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78a(a) ); (9) the term foreign issuer has the meaning given the term in section 240.3b–4 of title 17, Code of Federal Regulations, or any successor regulation; (10) the term foreign public accounting firm has the meaning given the term in section 106(g) of the Sarbanes-Oxley Act of 2002 ( 15 U.S.C. 7216(g) ); (11) the term national securities exchange means an exchange that is registered with the Commission under section 6 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78f ); and (12) the term public accounting firm has the meaning given the term in section 2(a) of the Sarbanes-Oxley Act of 2002 ( 15 U.S.C. 7201(a) ). 3. Restriction on issuance of nonimmigrant visas to nationals of China (a) Restriction The Secretary of State may not issue a visa to, and the Secretary of Homeland Security shall deny entry to the United States of, an alien under section 101(a)(15) of the Immigration and Nationality Act ( 8 U.S.C. 1101(a)(15) ) if the alien is a national of the People’s Republic of China seeking to enter the United States for the purpose of— (1) studying science, technology, engineering, mathematics, or a related field; (2) employment in science, technology, engineering, mathematics, or a related field; or (3) attending a business meeting, conference, or academic or cultural exchange, that includes activities related to science, technology, engineering, mathematics, or a related field. (b) Applicability The restriction under subsection (a) shall not apply for any year in which the President certifies to Congress that— (1) the People’s Republic of China has not provided state support of cyber espionage against a United States company during the preceding year; and (2) no individual or entity present in the United States has engaged in espionage against a United States company on behalf of the People’s Republic of China during the preceding year. (c) Definitions In this section: (1) Cyber espionage The term cyber espionage means unauthorized access to a communications network, a communications system, or a device connected to such a network or system that— (A) is carried out by a foreign government or any individual or entity working on behalf of a foreign government; and (B) is for the purpose of— (i) collecting information related to a copyrighted or copyrightable work, patented or patentable invention, trademarked good or service, or trade secret (as such term is defined in section 1839 of title 18, United States Code); or (ii) disruption, destruction, or manipulation of, or other change to, such network, system, or device or any information stored on or transmitted by such network, system, or device. (2) Espionage The term espionage means unauthorized access to or collection of information related to a copyrighted or copyrightable work, patented or patentable invention, trademarked good or service, or trade secret (as such term is defined in section 1839 of title 18, United States Code) by a foreign government or any individual or entity working on behalf of a foreign government. (3) United States company The term United States company means an organization organized under the laws of the United States or a State or political subdivision thereof. 4. Disclosures of foreign gifts (a) Short title This section may be cited as the Foreign Adversary Funding in Higher Education Act . (b) Special rule Section 117(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1011f(a) ) is amended— (1) by striking Whenever any and by inserting the following: (1) In general Subject to paragraph (2), whenever any ; and (2) by adding at the end the following: (2) Special rule (A) In general Notwithstanding paragraph (1), whenever any institution is owned or controlled by a foreign source listed in subparagraph (B) or receives a gift from or enters into a contract with that foreign source, paragraph (1) shall be applied by substituting $25,000 for $250,000 . (B) Foreign source A foreign source listed in this subparagraph is: (i) The People’s Republic of China. (ii) The Russian Federation. (iii) The Islamic Republic of Iran. (iv) The Democratic People’s Republic of Korea. . (c) Enforcement Section 117(f)(2) of the Higher Education Act of 1965 ( 20 U.S.C. 1011f(f)(2) ) is amended by inserting an amount equal to the amount that the institution failed to report under this section and before the full costs . (d) Web portal Section 117 of the Higher Education Act of 1965 ( 20 U.S.C. 1011f ) is further amended— (1) by redesignating subsections (g) and (h) as subsections (h) and (i), respectively; and (2) by inserting after subsection (f), the following: (g) Web portal Not later than 180 days after the date of enactment of the Foreign Adversary Funding in Higher Education Act , the Secretary shall establish a publicly available web portal that— (1) enables electronic filing of disclosure reports under this section; and (2) includes any reports filed before such date of enactment. .