Disclosure considerations for China-Based issuers

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Nov 23, 2020

On November 23, 2020, the Securities and Exchange Commission (SEC) released guidance that provides the Division of Corporation Finance’s views regarding certain disclosure considerations for companies based in or with the majority of their operations in the People’s Republic of China (“PRC” or “China”).

Although China-based Issuers that access the U.S. public capital markets generally have the same disclosure obligations and legal responsibilities as other non-U.S. issuers, the Commission’s ability to promote and enforce high-quality disclosure standards for China-based Issuers may be materially limited. As a result, there is substantially greater risk that their disclosures may be incomplete or misleading. In addition, in the event of investor harm, investors generally will have substantially less access to recourse, in comparison to U.S. domestic companies and foreign issuers in other jurisdictions.

This guide discusses some of the potential risks associated with investments in China-based Issuers. It also highlights related disclosure considerations that these issuers should consider as they seek to fulfill their disclosure obligations under the federal securities laws.

Review the guidance on the SEC's website.

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