20-F/A: CLPS Incorporation Files Amendment to 20-F Annual Report Addressing SEC Comments on Foreign Jurisdiction Inspections

CLPS Incorporation filed an amendment to its 20-F annual report to address SEC comments regarding disclosures related to foreign jurisdictions that prevent inspections.

Summary

• CLPS Incorporation filed Amendment No. 1 to its Annual Report on Form 20-F for the fiscal year ended June 30, 2023.
• The amendment solely addresses Item 16I regarding disclosures about foreign jurisdictions that prevent inspections, responding to SEC staff comments.
• The company was previously identified by the SEC as a Commission-Identified Issuer under the HFCAA due to its auditor being headquartered in mainland China, where the PCAOB was unable to inspect completely in 2021.
• The PCAOB has since vacated its 2021 Determinations and removed mainland China and Hong Kong from the list of jurisdictions where it was unable to inspect completely registered public accounting firms.
• The company does not expect to be identified as a Commission-Identified Issuer under the HFCAA for the fiscal year ended June 30, 2023.
• The company confirmed that, to the best of its knowledge, none of its shares or those of its consolidated foreign operating entities are owned by governmental entities in specified jurisdictions.
• The company also confirmed that no governmental entities in Hong Kong or mainland China have a controlling financial interest in the company or its consolidated foreign operating entities.
• The company confirmed that none of the members of its board of directors or the board of directors of its consolidated foreign operating entities is an official of the Chinese Communist Party.
• The company's memorandum and articles of association do not contain any charter of the Chinese Communist Party.

Sentiment

Score: 7

Explanation: The sentiment is neutral to slightly positive. The company is addressing SEC concerns and expects to avoid HFCAA identification, which is a positive development. However, the prior identification as a Commission-Identified Issuer tempers the overall sentiment.

Positives

• The PCAOB's decision to remove mainland China and Hong Kong from the list of jurisdictions where it was unable to inspect completely registered public accounting firms is a positive development.
• The company does not expect to be identified as a Commission-Identified Issuer under the HFCAA for the fiscal year ended June 30, 2023.
• The company has taken steps to confirm that it is not owned or controlled by any governmental entity in the specified jurisdictions.

Negatives

• The company was previously identified by the SEC as a Commission-Identified Issuer under the HFCAA.

Risks

• The company's operations are subject to regulatory scrutiny, particularly concerning the Holding Foreign Companies Accountable Act (HFCAA).
• Failure to comply with regulatory requirements could result in delisting from U.S. stock exchanges.

Future Outlook

The company anticipates not being identified as a Commission-Identified Issuer under the HFCAA for the fiscal year ended June 30, 2023.

Industry Context

This filing is related to increased scrutiny of US listed companies with auditors in China and Hong Kong.

Stakeholder Impact

• Shareholders may be reassured by the company's efforts to address SEC concerns and avoid HFCAA identification.
• The company's compliance with regulatory requirements is important for maintaining its listing on the NASDAQ Stock Market LLC.

Key Dates

Keywords

HFCAA, PCAOB, SEC, Form 20-F, Foreign Jurisdiction Inspections, CLPS Incorporation, Audit, China