Issuers Should Consider SEC Staff Sample Letter on China-Specific Disclosures

Summary

Issuers with significant operations in the People’s Republic of China (PRC) should consider a sample comment letter released by the SEC staff regarding disclosure of material impacts and risks to their businesses in their upcoming filings. 

In recent years, the SEC has been particularly focused on disclosures related to the legal, operational, and other risks associated with issuers based in, or with a majority of operations in, the PRC (referred to as “China-based issuers”). The SEC staff has issued sample letters, SEC staff statements, and Disclosure Guidance from the Division of Corporation Finance. As part of the SEC’s ongoing monitoring of China-based issuers under the Holding Foreign Companies Accountable Act (HFCAA), the SEC staff indicated issuers are required to provide more prominent and specific disclosures that are tailored to their individual facts and circumstances. The SEC staff elaborates on these disclosure matters (summarized in the table below) in its latest sample letter. 

Read a Sample letter regarding China-specific disclosures.

¹ A Commission-Identified Issuer is an issuer that has retained an auditor in a foreign jurisdiction that the PCAOB is not able to fully inspect or investigate due to positions taken by the regulatory authority in that foreign jurisdiction. Until recently, China was one of these jurisdictions.