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H.R. 7234 - Holding Foreign Companies Accountable Act

Introduced: 2018-12-10
Bill Status: Referred to the House Committee on Financial Services.
 
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Full Text


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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