The U.S. Securities Exchange Commission (SEC) is enacting new requirements seeking additional information disclosures from Chinese firms.

The new regulations are a furthering of the implementation of the Holding Foreign Companies Accountable Act: a bipartisan bill passed amid the stark divide of the 2020 election season meant to reign in Chinese companies listed on U.S. stock exchanges.

According to SEC chair Gary Gensler, the decision may have also been due partly to China's flurry of recent regulatory activity.

"In light of the recent developments in China and the overall risks with the China-based [variable interest entities] structure, I have asked staff to seek certain disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective," Gensler said on Friday.

"Variable interest entities," or VIEs, refers to a business structure in which investors have a controlling interest despite not having a controlling amount of shares, often protecting them from legal action or debt collectors. VIEs are used by Chinese firms to circumvent the regulations of the Chinese Communist Party, denying foreign ownership of Chinese firms, typically through offshore shell companies.

The requirement of additional disclosures could alter the landscape of the American capital market for more than just Chinese firms. As Gensler pointed out during his Friday announcement, many American investors may not be aware that the stock they own, ostensibly of a firm such as Alibaba (BABA  ), is really of a shell company. Firms will be required to disclose this going forward and will also be required to disclose the potential risks caused by the Chinese government itself to investors.

The threat of delisting still looms large over Chinese firms for noncompliance as well. Under the HFCAA, Chinese firms could face delisting if they do not comply with U.S. auditors within three years of the bill's signing.