The Securities and Exchange Commission (SEC) decided that Canaan engaged an auditor whose working papers the Public Company Accounting Oversight Board cannot inspect or probe fully (PCAOB).
The SEC announced on Wednesday that it is placing 88 Chinese businesses on a pre-delisting list, including Chinese mining machine producer Canaan Inc.
Canaan Inc. has until May 25 to file a counter-claim.
Since May 4, Canaan’s stock price has dropped 3.8 percent.
On Thursday, Canaan stated that it would “continue to comply with applicable rules and regulations in both China and the United States, and aim to maintain its NASDAQ listing status.”
The PCAOB is requesting access to audit working materials held in China by New York-listed Chinese corporations.
Such demands have so far been turned down by China due to national security concerns.
The Foreign Corporate Accountability Act (HFCAA), which was signed into law in 2021, states that a firm that has been on the SEC’s list for three years in a row may be delisted.
So far this year, 105 Chinese companies have been added to the list of probable delisting candidates, with 23 of them being confirmed.
According to Reuters, both countries are contemplating an audit agreement to avoid delisting, with Beijing wanting to sign one this year.
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