stock was dropping Thursday after U.S. regulators added the Chinese search giant to its growing list of companies that could be removed from American stock exchanges.
The Securities and Exchange Commission on Wednesday added Baidu (ticker: BIDU) and four other Chinese companies to a provisional watchlist of foreign companies that face delisting if they don’t allow U.S. regulators to review their audits for three consecutive years. Chinese law currently forbids companies from doing so.
Baidu’s shares in Hong Kong fell 3.4%. American depositary receipts of Baidu were down 2% in premarket Thursday after falling 2.6% on Wednesday.
In a statement on Thursday, Baidu said that it understood the SEC’s action may have resulted from the filing of its annual report on Form 20-F for the fiscal year ended Dec 31, 2021.
“The Company understands the SEC made such identification pursuant to the [Holding Foreign Companies Accountable Act] and its implementation rules issued thereunder, and this indicates that the SEC determines that the Company used an auditor whose working paper cannot be inspected or investigated completely by the Public Company Accounting Oversight Board.”
“The Company has been actively exploring possible solutions,” Baidu said in the statement, adding that it will continue to comply with applicable laws and regulations in both China and the U.S. and “strive to maintain itslisting status on both Nasdaq and The Stock Exchange of Hong Kong Limited.”
The SEC also added online brokerage platform
(FUTU), aquaculture equipment provider
(NCRA), biopharmaceutical company
(CASI), and video streaming platform
(IQ) to its provisional list for potential delistings, bringing the total number of companies identified by the regulator to 11.
The SEC’s delisting push targeting Chinese companies adds further uncertainty to volatile Chinese tech shares, which have been under pressure following Beijing’s regulatory crackdowns.
Write to Lina Saigol at [email protected]