In the news: Audit fight thaws, Ping An buys Lloyd's of London building and drug pricing is investigated
July 12, 2013 | BY
clpstaff &clp articles &The CSRC has said it will release auditing papers to its counterparts in the US. Ping An insurance has purchased a London building for $388 million and the NDRC has launched another investigation, this time into drug pricing
Beijing concedes as audit documents handed over
The China Securities Regulatory Commission (CSRC) will hand over the audit documents of a US-listed Chinese company to the Securities and Exchange Commission (SEC) and the Public Company Account Oversight Board (PCAOB). A media representative for the CSRC confirmed reports of the handover on Tuesday. The company or the documents involved remains unknown.
This is the second breakthrough in a two-year standoff between US and China regulators. China has adamantly refused to hand over audit documents because of state-secrets and accounting firms have also refused, citing their fear of violating China's laws. The CSRC was supposed to turn over documents in May, but nothing has been transferred. Writing for China Law & Practice in March, Paul Gillis, author of the China Accounting Blog and a professor at Peking University, said that it is up to China to decide as private companies will lose access to much needed capital if they cannot list in the US. The CSRC appears to be recognising this loss, but they will have to be more transparent in the future for the situation to return to pre-2010 levels.
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Why the audit fight between regulators will hurt China
Ping An insurance buys Lloyd's of London building
Bloomberg reported that Ping An, China's second largest insurer, has agreed to buy the Lloyd's of London building for £260 million ($388 million). The deal will require regulatory approval and is one of many potential deals this year, as domestic investors are predicted to spend $5 billion on international real estate, according to Jones Lang Lasalle.
This is in response to the myriad of legislation published by the China Insurance Regulatory Commission (CIRC) towards the end of last year opening up insurance proceeds investment. With declining profits in the insurance business, it was necessary to allow the country's insurers access to greater investments. The move also backs up the trend of Chinese investors turning to UK real estate, as was shown by Dalian Wanda's move to build in the capital last month.
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NDRC goes after drug companies
The FT reported the National Development and Reform Commission's drug pricing investigation into 60 domestic and international drug makers. Merck, GlaxoSmithKline, Astellas and Baxter Healthcare are some of the companies included in the investigation. The investigation follows on from the NDRC's decision to look into baby formula prices last week.
The NDRC is obviously feeling confident and is ready to correct some of the wrongs in the China market that have led to rampant price increases in previous years. Drug prices are not a surprising target as the country's healthcare regime battles to meet domestic demand. It is clear that price cuts are necessary across the board and companies should look at their own prices, as they might be the next target for an investigation.
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