Source: United States Senator for Florida Marco Rubio
Washington, D.C. — U.S. Senators Marco Rubio (R-FL) and Marsha Blackburn (R-TN) introduced the No Chinese Communist Subterfuge via Unregistered Regime Presence Rendered Invisible to Shareholders and Equivalent Parties Act, or No Chinese Communist SURPRISE Parties Act (S.3598), which would direct the U.S. Securities and Exchange Commission (SEC) to require companies listed on U.S. exchanges to identify whether a Chinese Communist Party (CCP) organization is present in the firm’s operations. The bill would also require any company to detail the participation that any CCP party organization has had in its corporate governance decisions and disclose whether the firm is subject to any fiduciary duties, including foreign ones.
Congresswoman Claudia Tenney (R-NY) introduced companion legislation in the U.S. House of Representatives.
“U.S.-listed companies should not act as tools of the Chinese Communist Party, and American investors are entitled to know if that is the case,” Rubio said. “My bill provides a common-sense solution to yet another attempt by Beijing to subvert the United States by deepening its influence over the American financial marketplace.”
“Communist China continues to exert control over American companies by forcing them to develop communist party organizations within their ranks,” Blackburn said. “American investors have the right to know whether or not their hard-earned money is propping up companies that the CCP controls.”
“Americans have a right to know who is really running the show when they choose to invest in a company listed on an American stock exchange,” Tenney said. “The Chinese Communist Party’s malign influence runs deep, and the No Chinese Communist SURPRISE Parties Act will help bring to light the areas of influence and leverage that the CCP has over publicly listed companies and reduce information asymmetries in the financial marketplace. I am grateful for the support of my colleagues and look forward to moving this bicameral bill through the legislative process, especially as House Democrats push legislation that will weaken the United States’ standing on the world stage and strengthen China.”
The No Chinese Communist SURPRISE Parties Act would add three new disclosure requirements to the annual reports that firms (“covered issuers”) listed on U.S. exchanges, including foreign private issuers, must submit. These include:
- Disclosing whether the covered issuer has established or maintained a CCP organization during the period covered by the report;
- If a party organization is present in a covered issuer’s operations, summarizing the nature of that participation; and
- Disclosure of whether the board of the covered issuer owes a fiduciary duty to shareholders, or is otherwise subject to heightened scrutiny with respect to conflicted controller transactions.
A one-pager providing further information on the legislation is available here.