Jack Ma owned Alibaba added to the delisting watchlist by SEC
US SEC added Alibaba to the list of companies that might be delisted
USA's Securities and Exchange Commission (SEC) has tightened the noose around Chinese tech behemoth Alibaba Group Holding Limited. Reportedly, Alibaba, on Friday, became the latest entrant into the list of Chinese companies that might be delisted by the Commission.
Reportedly, the US regulators have been demanding Alibaba to share its account books, stored in China, with the auditors.
If Alibaba is de-listed from the American market, it could be a major crisis for the company whose shares weredown 11 per centat $89.37, at the closing of the market.
These developments also come in the backdrop of founder Jack Ma, reportedly, looking to cede control of his fintech firm Ant Group Co. Ever since Ma separated Ant's assets from Alibaba more than ten years ago, he has held the reins of the company.
However, if he steps down and the SEC brings down the hammer on the delisting, it could be a double whammy for Alibaba.
Read More:Jack Ma intends to give up control of the Ant Group: Wall Street Journal
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Why do Chinese companies not share their books?
It is pertinent to note that the Chinese Communist Party (CCP) does not allow Chinese companies to share their account books with overseas audit agencies.
Most Chinese companies have an unsaid fidelity to the CCP. Opening the books might expose the connection and thus Beijing has been overtly protective of the companies.
American regulatory watchdog Public Company Accounting Oversight Board (PCAOB) has the power to audit such companies. However, if the watchdog is not able to access the books for a period of three years, the company stands to be de-listed from the stock market.
Access to books has been a major bone of contention between Washington and Beijing. When Donald Trump was in power and amidst a major trade war with China, he employed the strategy of opening 'books' to pin down China.
Under the Holding Foreign Companies Accountable Act (HFCAA), over 270 Chinese companies are at the verge of being delisted from the US. However, Alibaba's delisting could be the biggest news of the lot.
(With inputs from agencies)
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