Disclose or delist! US issues strict guidelines targeting Chinese firms listed on Wall Street

Wall Street regulator the Securities and Exchange Commission (SEC) on Thursday announced changes that mandates foreign companies open their books to US scrutiny or be delisted from the US markets. This adds pressure to Chinese firms that have refused inspections despite US law requiring them since 2002. As per Bloomberg the new rule could lead to more than 200 companies being kicked off US markets. The first one of the block is ride sharing app Didi, that announced on its Weibo account that it has begun preparations to delist in the U.S. and will start work on a Hong Kong share sale.

What is the new regulation of disclosures

• Requires companies to disclose whether they are "owned or controlled" by a government
• Companies to identify and name any govt members on their board of directors.
• The percentage of shares that are owned by a government entity
• Whether government entities have a controlling financial interest

On Thursday, Alibaba's share price hit its lowest level in more than four years on rumors the Chinese e-commerce giant would exit US indices.