Baidu Provides Update on Status under Holding Foreign Companies Accountable Act

Rhea-AI Summary

Baidu, Inc. (NASDAQ: BIDU) has been identified by the SEC under the Holding Foreign Companies Accountable Act (HFCAA) as of March 30, 2022. This identification may stem from the company's 2021 annual report, indicating that its auditor's working papers could not be fully inspected by the PCAOB. If identified for three consecutive years, Baidu could face delisting from U.S. exchanges. The company is actively seeking solutions and remains committed to compliance with laws in both China and the U.S., aiming to maintain its listings on Nasdaq and HKEx.

Positive

• Baidu is actively exploring solutions to address SEC concerns regarding auditor inspections.
• The company aims to maintain compliance with laws in both China and the U.S., indicating a proactive approach to regulatory challenges.

Negative

• The SEC's identification under HFCAA raises concerns regarding potential future delisting from U.S. stock exchanges.
• Baidu's inability to use an auditor whose working papers can be inspected may affect investor confidence.

BEIJING, March 31, 2022 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888) ("Baidu" or the "Company"), a leading AI company with strong Internet foundation, today provides an update on its status under the Holding Foreign Companies Accountable Act (the "HFCAA").

Baidu is aware that the Company has been identified by the SEC under the HFCAA on March 30, 2022. The Company understands such identification may result from its filing of the annual report on Form 20-F for the fiscal year ended December 31, 2021. 

Baidu understands the SEC made such identification pursuant to the HFCAA and its implementation rules issued thereunder, and this indicates that the SEC determines that the Company used an auditor whose working paper cannot be inspected or investigated completely by the PCAOB, to issue the audit opinion for its financial statements for the fiscal year ended December 31, 2021.

In accordance with the HFCAA, a company will be delisted from a U.S. stock exchange only if the company has been identified by the SEC for three consecutive years due to PCAOB's inability to inspect auditor's working paper.

Baidu has been actively exploring possible solutions. Baidu will continue to comply with applicable laws and regulations in both China and the United States, and strive to maintain its listing status on both Nasdaq and the HKEx.

About Baidu

Founded in 2000, Baidu's mission is to make the complicated world simpler through technology. Baidu is a leading AI company with strong Internet foundation, trading on NASDAQ under "BIDU" and HKEX under "9888". One Baidu ADS represents eight Class A ordinary shares.

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SOURCE Baidu, Inc.

FAQ

What does the SEC's identification of Baidu under the HFCAA mean?

It indicates that the SEC believes Baidu's auditor's working papers cannot be fully inspected, which could lead to delisting if it continues for three years.

When was Baidu identified by the SEC under the HFCAA?

Baidu was identified on March 30, 2022.

What are the implications of the HFCAA for Baidu's stock listing?

Baidu could be delisted from U.S. exchanges if identified for three consecutive years.

How is Baidu responding to the SEC's concerns under the HFCAA?

Baidu is exploring solutions and is committed to complying with applicable laws in both China and the U.S.