Chinese companies that want to sell shares in the United States should make more disclosures about potential risks.

Friday’s announcement by the Securities and Exchange Commission came after Beijing announced that it would increase its oversight of Chinese companies listed abroad, and include cybersecurity reviews.

Gary Gensler, Chair of the SEC, referred in particular to Chinese companies that use shell corporations to circumvent Chinese laws that block foreign ownership of their industries.

These deals allow the Chinese company to form a shell corporation in the Cayman Islands, or anywhere else. After being listed in New York, the shell company sells its stock shares to investors.

The Chinese company is not owned by the shell company. It has service agreements with the Chinese company. These agreements are known as variable interest entities (or “VIEs”)

Gensler stated, “I worry that average investors might not realize that they have stock in a Shell company rather than a China based operating company.”

Gensler stated that he requested the SEC staff to ensure such companies made several disclosures prior to an initial public offering. They should make it clear that investors are purchasing shares of the shell company and not the China-based operating companies. Future actions by China could have a significant impact on financial performance.

Gensler stated that any Chinese company seeking an IPO in the United States must disclose that there are risks that approvals by Chinese authorities could be withdrawn.

Many big-name Chinese companies saw their stock prices fall recently due to Beijing’s increased regulation of data security.

U.S.-listed shares of ride-hailing company Didi Global, for example, have been falling since they began trading at the end of June. After the company was told to stop signing up new customers and remove its app form online stores, they fell nearly 20% on their fourth trading day.