Alibaba Group Holding Ltd (NYSE:BABA) CFO Maggie Wu has indicated that the Chinese company is closely monitoring the US bill proposing the delisting of foreign companies for its stock exchanges. The CEO indicated that the company is optimistic that it will comply with new changes to the Securities Rules.
New Securities rule targets Chinese companies
According to Wu, the company will try to comply with rules seeking to protect and enhance transparency to investors acquiring securities on the US securities exchanges. The US Senate approved the new legislation on Wednesday, and the rule is targeting Chinese companies. The rule requires listed companies on the US exchanges to certify that there is no influence of a foreign government in the company. The new legislation will require foreign companies to submit their original auditing documents. But this will create a challenge for Chinese companies because of legislation in the country restricting their distribution.
In an earnings conference call discussing the company’s quarterly results, the CFO indicated that the Chinese conglomerate has been adhering with US accounting rules, and Hong Kong’s arm of PricewaterhouseCoopers audits the company. Wu said that for investors that had acquired the company’s stock in 2014 during its IPO would have received massive returns. Since 2014 the company’s shares have surged 197% relative to a 2% gain in NYSE Composite Index.
Tensions between the US and China brewing
The proposed legislation received bipartisan support in the Senate, and the House will review it this week. This comes at a time when tension between the US and China is brewing, resulting in concerns of a possible escalation of another dispute.
Daniel Zhang, the CEO of Alibaba, stated that the brewing tensions have added more uncertainty post-coronavirus pandemic. For years Alibaba has been plagued with investigations from the US SEC regarding its accounting practices and financial structures since its IPO in 2014. The focus of the probe has been on the consolidation of the company’s businesses and associated party transactions that include the Cainiao Network logistics segment and Ant Financial.
