Chinese search giant Baidu has been warned it may be delisted as a result of audit concerns.
Baidu is the dominant search engine in China, and is currently listed on the Nasdaq. Unfortunately for Baidu, its listing is in jeopardy, with the Securities and Exchange Commission (SEC) putting the company on a provisional list of companies that face delisting under the Holding Foreign Companies Accountable Act (HFCAA).
Companies are put on the provisional list when “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.”
Once a company is put on the provisional list, it has 15 business days to contact the SEC staff and provide evidence to support why it should not be delisted. In the case of Baidu, the deadline is April 20, 2022.
Should Baidu fail to appeal its placement on the provisional list, or fail to convince the SEC it should remain on the Nasdaq, its delisting will likely exacerbate the US/China trade issues.