March 31, 2021
Authored by: Katherine Ashton and Vicki Westerhaus
The SEC recently announced its adoption of interim final amendments to certain forms, including Form 10-K and Form 20-F, to implement the congressionally mandated document submission and disclosure requirements of the Holding Foreign Companies Accountable Act (the “HFCA Act”) that became effective in December 2020. The amendments will become effective 30 days after publication in the Federal Register. They apply to public companies (each, a “Commission-Identified Issuer”) that are identified by the SEC as having filed an annual report that includes an audit report issued by a registered public accounting firm that (1) has a branch or office located in a foreign jurisdiction and (2) the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. The SEC will be responsible for identifying such companies, and the PCAOB will be required to identify audit firms that have a location in such a foreign jurisdiction.
Annual Report Amendments. The new requirements will be implemented (1) with respect to Form 10-K, by the addition of Part II, Item 9C, and (2) with respect to Form 20-F, by the addition of Part II, Item 161. Each new item will be captioned “Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.”
New Submission Requirement – Commission-Identified Issuers. The new rules refer to any year in which the SEC identifies a company as a Commission-Identified Issuer as a “non-inspection year.” The interim final amendments will require that each Commission-Identified Issuer submit, on or