China will for the first time allow the US securities watchdog to view audit papers of a Chinese firm to end a six-year-long dispute in a bid to restore faith in Chinese companies, sources said yesterday.[company registration in Hong Kong, Hong Kong company incorporation]

The China Securities Regulatory Commission will hand over documents of a company being investigated by the US Securities and Exchange Commission and the Public Company Accounting Oversight Board for possible accounting fraud, people familiar with the matter told Shanghai Daily.

The CSRC yesterday declined a Shanghai Daily request to name the company.

The CSRC decision was first reported by official securities newspapers including the China Securities Journal and the Shanghai Securities News.

The move aims to improve market order and protect creditability of Chinese companies listed overseas, an unidentified CSRC official told the securities newspapers earlier this week.

Xie Kaicong, vice president of Guosen Securities (Hong Kong) Brokerage, said: "The first-ever move taken by the CSRC will help boost confidence of foreign investors, and restore the value of Chinese companies listed overseas."

The CSRC's move followed an agreement between the Chinese and US securities and auditing authorities in May that China will turn over some documents to the US under certain circumstances. It also coincided with high-level bilateral economic talks in Washington.[Company Registration in USA]

The move is expected to reopen the US stock market to Chinese firms, which has been nearly closed to new listings of Chinese companies for the past three years due to their creditability woes. At least 39 US-listed Chinese firms have been charged with alleged fraud and 44 companies were delisted from the US stock market for other violations including cheating.

The CSRC has urged the SEC to cancel a legal suit last year to force the Chinese branches of Deloitte, KPMG, PricewaterhouseCoopers, BDO and Ernst & Young to turn over audit papers of companies under investigation.[Company Formation | Offshore Company | Company Incorporation]

Deloitte yesterday declined to comment on the CSRC's move.