On July 9, 2020, SEC Office of Internal Affairs Director Raquel Fox and SEC Division of Corporation Finance Director William Hinman moderated a panel discussion concerning the disclosure and reporting considerations of investments in emerging markets.

The panel discussed the disclosure considerations associated with investments in emerging markets in general, and particularly, in China.

To enhance existing risk disclosures, the panelists proposed and suggested that affected issuers, including those operating primarily in China:

  • Provide discussions on material operations and risks regarding related-party transactions, the regulatory environment, uncertainties in interpretation of existing regulations, foreign ownership restriction, and tax-related matters.
  • Highlight as separate risk factor disclosures those pertaining to the limitation on the PCAOB auditor inspection and working paper access, inability of companies to comply with U.S. laws due to foreign jurisdiction’s laws (e.g. Article 177 of the PRC Securities Laws), and the inability of the SEC and the U.S. DOJ to conduct investigations or their lack of oversight.
  • Identify the material differences (and explain the implications of these differences) between the corporate governance, practices, and reporting requirements in the United States and in China.

A webcast archive of the panel discussion will be available on the SEC website.