Holding China Accountable Act

I 116TH CONGRESS 2D SESSION H. R. 7181 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. 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. MAR- SHALL, 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 provi- sions 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 na- tionals of the People’s Republic of China from receiving nonimmigrant visas, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 7181 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Holding China Ac- 2 countable Act’’. 3 SEC. 2. DISCLOSURES AND PROHIBITION AGAINST THE 4 LISTING OF CERTAIN FIRMS ON NATIONAL 5 SECURITIES EXCHANGES. 6 (a) DISCLOSURE.— 7 (1) LIST OF CERTAIN FOREIGN ISSUERS AND 8 COVERED FOREIGN PUBLIC ACCOUNTING FIRMS.— 9 (A) IN GENERAL.—The Commission shall 10 maintain a publicly available list of— 11 (i) each foreign issuer, an audit report 12 of which— 13 (I) is prepared by a foreign pub- 14 lic accounting firm; and 15 (II) the Board is not able to in- 16 spect or investigate because of a posi- 17 tion taken by an authority that is out- 18 side of the United States; 19 (ii) each covered foreign public ac- 20 counting firm that has prepared an audit 21 report identified under clause (i); and 22 (iii) the jurisdiction in which each cov- 23 ered foreign public accounting firm identi- 24 fied under clause (ii) is organized or oper- 25 ating. 26 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 7181 IH (B) ROLE OF THE BOARD.—Not less fre- 1 quently than annually, the Board shall provide 2 to the Commission the information that is re- 3 quired for the Commission to carry out sub- 4 paragraph (A). 5 (2) ANNUAL REPORT DISCLOSURE.— 6 (A) DISCLOSURE.—Each applicable foreign 7 issuer shall disclose in each covered form filed 8 by the applicable foreign issuer— 9 (i) that, during the period covered by 10 covered form, a covered foreign public ac- 11 counting firm has prepared an audit report 12 for the issuer; 13 (ii) the percentage of the shares of the 14 issuer owned by governmental entities in 15 the foreign jurisdiction in which the issuer 16 is incorporated or otherwise organized; 17 (iii) whether governmental entities in 18 a covered jurisdiction with respect to any 19 covered foreign public accounting firm that 20 has prepared an audit report for the issuer 21 during the period covered by the form have 22 a controlling financial interest with respect 23 to the issuer; and 24 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 7181 IH (iv) the name of any official of the 1 Chinese Communist Party who is a mem- 2 ber of the board of directors of the issuer 3 or the operating entity with respect to the 4 issuer. 5 (B) UPDATE OF RULES.—Not later than 6 270 days after the date of enactment of this 7 Act, and after providing the opportunity for 8 public notice and comment, the Commission 9 shall make any amendments to the rules of the 10 Commission that are required as a result of the 11 requirements of this subsection. 12 (C) EFFECTIVE DATE.—This subsection 13 shall take effect on the date on which the Com- 14 mission completes the amendments required 15 under subparagraph (B). 16 (3) DISCLOSURE BY BROKERS AND DEALERS.— 17 Section 15(n) of the Securities Exchange Act of 18 1934 (15 U.S.C. 78o(n)) is amended— 19 (A) in paragraph (1), by striking ‘‘Com- 20 mission may issue’’ and all that follows through 21 the period at the end and inserting the fol- 22 lowing: ‘‘Commission— 23 ‘‘(A) shall issue rules that require a broker 24 and a dealer to disclose, with respect to any ad- 25 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 7181 IH vice, analysis, or report of the broker or dealer 1 to a retail investor regarding the securities of a 2 foreign issuer, whether a covered foreign public 3 accounting firm has prepared an audit report 4 for the foreign issuer; and 5 ‘‘(B) in addition to the rules required 6 under subparagraph (A), may issue rules desig- 7 nating documents or information that shall be 8 provided by a broker or dealer to a retail inves- 9 tor before the purchase of an investment prod- 10 uct or service by the retail investor.’’; and 11 (B) by adding at the end the following: 12 ‘‘(4) DEFINITIONS.—In this subsection, the 13 terms ‘audit report’, ‘covered foreign public account- 14 ing firm’, and ‘foreign issuer’ have the meanings 15 given the terms in section 2 of the EQUITABLE 16 Act.’’. 17 (b) PROHIBITION AGAINST THE LISTING OF CERTAIN 18 FIRMS ON NATIONAL SECURITIES EXCHANGES.— 19 (1) IN GENERAL.—Section 6(b) of the Securi- 20 ties Exchange Act of 1934 (15 U.S.C. 78f(b)) is 21 amended by adding at the end the following: 22 ‘‘(11)(A) The rules of the exchange prohibit the 23 initial listing, after the date of enactment of this 24 paragraph, of any security of an issuer for which a 25 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 7181 IH covered foreign public accounting firm has prepared 1 an audit report. 2 ‘‘(B) Nothing in subparagraph (A) may be con- 3 strued to prevent an exchange from listing a security 4 on the exchange on or after the date of enactment 5 of this paragraph if that security was listed on the 6 exchange or a national securities exchange before 7 the date of enactment of this paragraph. 8 ‘‘(C) In this paragraph, the terms ‘audit report’ 9 and ‘covered foreign public accounting firm’ have the 10 meanings given the terms in section 2 of the EQUI- 11 TABLE Act. 12 ‘‘(12)(A) The rules of the exchange prohibit the 13 listing of any security of a foreign issuer that, begin- 14 ning in 2025, has been identified under section 15 3(a)(1)(A) of the EQUITABLE Act in 3 consecutive 16 years. 17 ‘‘(B) Nothing in subparagraph (A) may be con- 18 strued to prevent an exchange from listing a security 19 of a foreign issuer described in that subparagraph 20 beginning on the date on which the issuer submits 21 to the Commission an audit report for the issuer 22 that is prepared by a registered public accounting 23 firm that the Public Company Accounting Oversight 24 Board has inspected, or is able to inspect, under sec- 25 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 7181 IH tion 104 of the Sarbanes-Oxley Act of 2002 (15 1 U.S.C. 7214). 2 ‘‘(C) In this paragraph— 3 ‘‘(i) the terms ‘audit report’ and ‘reg- 4 istered public accounting firm’ have the mean- 5 ings given the terms in section 2(a) of the Sar- 6 banes-Oxley Act of 2002 (15 U.S.C. 7201(a)); 7 and 8 ‘‘(ii) the terms ‘covered foreign public ac- 9 counting firm’ and ‘foreign issuer’ have the 10 meanings given the terms in section 2 of the 11 EQUITABLE Act.’’. 12 (2) RULES.— 13 (A) PROPOSALS.—Not later than 90 days 14 after the date of enactment of this Act, each 15 national securities exchange shall, in accordance 16 with section 19(b) of the Securities Exchange 17 Act of 1934 (15 U.S.C. 78s(b)) and any rules 18 prescribed by the Commission under that sec- 19 tion, file with the Commission any proposed 20 change to the rules of the exchange that is re- 21 quired as a result of the amendments made by 22 this section. 23 (B) ADOPTION.—Not later than 1 year 24 after the date of enactment of this Act, each 25 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 7181 IH national securities exchange shall have each 1 proposed change described in paragraph (1) ap- 2 proved by the Commission. 3 (c) DEFINITIONS.—In this section— 4 (1) the term ‘‘applicable foreign issuer’’ means 5 a foreign issuer— 6 (A) that is required to file a covered form; 7 and 8 (B) for which, during the period covered 9 by the filing described in subparagraph (A), a 10 covered foreign public accounting firm has pre- 11 pared an audit report for the issuer; 12 (2) the term ‘‘audit report’’ has the meaning 13 given the term in section 2(a) of the Sarbanes-Oxley 14 Act of 2002 (15 U.S.C. 7201(a)); 15 (3) the term ‘‘Board’’ means the Public Com- 16 pany Accounting Oversight Board; 17 (4) the term ‘‘Commission’’ means the Securi- 18 ties and Exchange Commission; 19 (5) the term ‘‘covered foreign public accounting 20 firm’’ means a foreign public accounting firm that 21 the Board is unable to inspect or investigate under 22 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et 23 seq.) because of a position taken by an authority 24 outside of the United States; 25 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 7181 IH (6) the term ‘‘covered form’’— 1 (A) means— 2 (i) the form described in section 3 249.310 of title 17, Code of Federal Regu- 4 lations, or any successor regulation; and 5 (ii) the form described in section 6 249.220f of title 17, Code of Federal Reg- 7 ulations, or any successor regulation; and 8 (B) includes a form that— 9 (i) is the equivalent of, or substan- 10 tially similar to, the form described in 11 clause (i) or (ii) of subparagraph (A); and 12 (ii) a foreign issuer files with the 13 Commission under the Securities Exchange 14 Act of 1934 (15 U.S.C. 78a et seq.) or 15 rules issued under that Act; 16 (7) the term ‘‘covered jurisdiction’’ means the 17 foreign jurisdiction in which the position described 18 in paragraph (5) is taken with respect to a covered 19 foreign public accounting firm that prepares an 20 audit report for an applicable foreign issuer; 21 (8) the term ‘‘exchange’’ has the meaning given 22 the term in section 3(a) of the Securities Exchange 23 Act of 1934 (15 U.S.C. 78a(a)); 24 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 7181 IH (9) the term ‘‘foreign issuer’’ has the meaning 1 given the term in section 240.3b–4 of title 17, Code 2 of Federal Regulations, or any successor regulation; 3 (10) the term ‘‘foreign public accounting firm’’ 4 has the meaning given the term in section 106(g) of 5 the Sarbanes-Oxley Act of 2002 (15 U.S.C. 6 7216(g)); 7 (11) the term ‘‘national securities exchange’’ 8 means an exchange that is registered with the Com- 9 mission under section 6 of the Securities Exchange 10 Act of 1934 (15 U.S.C. 78f); and 11 (12) the term ‘‘public accounting firm’’ has the 12 meaning given the term in section 2(a) of the Sar- 13 banes-Oxley Act of 2002 (15 U.S.C. 7201(a)). 14 SEC. 3. RESTRICTION ON ISSUANCE OF NONIMMIGRANT 15 VISAS TO NATIONALS OF CHINA. 16 (a) RESTRICTION.—The Secretary of State may not 17 issue a visa to, and the Secretary of Homeland Security 18 shall deny entry to the United States of, an alien under 19 section 101(a)(15) of the Immigration and Nationality Act 20 (8 U.S.C. 1101(a)(15)) if the alien is a national of the 21 People’s Republic of China seeking to enter the United 22 States for the purpose of— 23 (1) studying science, technology, engineering, 24 mathematics, or a related field; 25 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 7181 IH (2) employment in science, technology, engi- 1 neering, mathematics, or a related field; or 2 (3) attending a business meeting, conference, or 3 academic or cultural exchange, that includes activi- 4 ties related to science, technology, engineering, 5 mathematics, or a related field. 6 (b) APPLICABILITY.—The restriction under sub- 7 section (a) shall not apply for any year in which the Presi- 8 dent certifies to Congress that— 9 (1) the People’s Republic of China has not pro- 10 vided state support of cyber espionage against a 11 United States company during the preceding year; 12 and 13 (2) no individual or entity present in the United 14 States has engaged in espionage against a United 15 States company on behalf of the People’s Republic 16 of China during the preceding year. 17 (c) DEFINITIONS.—In this section: 18 (1) CYBER ESPIONAGE.—The term ‘‘cyber espi- 19 onage’’ means unauthorized access to a communica- 20 tions network, a communications system, or a device 21 connected to such a network or system that— 22 (A) is carried out by a foreign government 23 or any individual or entity working on behalf of 24 a foreign government; and 25 VerDate Sep 11 2014 21:36 Jun 30, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H7181.IH H7181 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 7181 IH (B) is for the purpose of— 1 (i) collecting information related to a 2 copyrighted or copyrightable work, pat- 3 ented or patentable invention, trademarked 4 good or service, or trade secret (as such 5 term is defined in section 1839 of title 18, 6 United States Code); or 7 (ii) disruption, destruction, or manip- 8 ulation of, or other change to, such net- 9 work, system, or device or any information 10 stored on or transmitted by such network, 11 system, or device. 12 (2) ESPIONAGE.—The term ‘‘espionage’’ means 13 unauthorized access to or collection of information 14 related to [Text truncated for display. 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