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Frequently Asked Questions
  What happens if a Nasdaq-listed company's securities are prohibited from being traded under the Holding Foreign Companies Accountable Act?
Identification Number 1834

The Holding Foreign Companies Accountable Act (“HFCAA”) requires the Securities and Exchange Commission to identify public companies that have retained a registered public accounting firm to issue an audit report where the firm has a branch or office that: (1) is located in a foreign jurisdiction, and (2) the Public Company Accounting Oversight Board (“PCAOB”) has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction. The Commission publishes a list of the companies it has identified at  Nasdaq has additional information about the HFCAA available here.


Under the HFCAA, if a company has three consecutive years where it is identified as having an auditor that the PCAOB is unable to inspect, then the Commission must prohibit the securities of the issuer from being traded, including on a national securities exchange.


If the Commission prohibits trading of a Nasdaq-listed issuer under the HFCAA, then Nasdaq will halt trading of the company’s securities and initiate delisting proceedings.  Specifically, Nasdaq Listing Rule 5101 allows Nasdaq to suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes continued listing of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated criteria for listing on Nasdaq.  A prohibition on trading by the Commission under the HFCAA would be an event that would prevent trading on Nasdaq, and therefore would warrant delisting under this rule.


Following a Commission prohibition, Nasdaq will request information from the company about the Commission's determination and the company’s ability to trade in the United States, and immediately halt trading pursuant to Rule 4120(a)(5)(B) until the company provide information satisfactory to Nasdaq demonstrating that it is eligible to trade (such as an updated determination from the Commission).  Furthermore, Nasdaq Listing Qualifications’ staff will issue a delisting determination to the company under Nasdaq Rule 5810(c)(1).  While the company may appeal that determination to a Hearings Panel pursuant to Nasdaq Rule 5815, the company’s securities would remain halted during any such appeal and Nasdaq would not resume trading during the Commission’s prohibition even if the Hearings Panel allows the continued listing of the company’s securities.
Publication Date*: 5/6/2022 Mailto Link Identification Number: 1834
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