June 4 (Reuters) - Wall Street`s top regulator took a step toward toughening rules for foreign companies listed on American stock markets on Wednesday, saying many Chinese firms in particular benefited from having to make fewer regular disclosures to investors.































The U.S. Securities and Exchange Commission voted unanimously to call for public comment on possible new regulations that would narrow the definition of those foreign companies, known as foreign Get Private Proxy issuers, that are required to publish only annual reports and occasional updates.































U.S. firms trading on the same stock exchanges fall under the full scope of American securities laws, including quarterly financial reporting, proxy solicitation rules and prompt disclosure of events such as mergers and the departures of board members.































Any new regulations for foreign companies could make it more costly and challenging for many to tap U.S. equity markets.































China would take whatever measures are necessary to protect the legitimate rights and interests of Chinese companies, its foreign ministry said in response to the SEC`s call for comment on possible new regulations.































"The U.S. should abide by the market regulation of fair competition and stop politicizing economic and trade issues," ministry spokesperson Lin Jian said at a regular news briefing on Thursday.































At a public SEC meeting, Paul Atkins, the newly installed Republican chair, said 55% of foreign private issuers were traded only in the United States, and of those, the majority were Chinese firms incorporated in the Cayman Islands.































A congressional study last year found that 90% of the 265 U.S.-listed Chinese companies were not traded outside the United States.































"It is therefore only prudent for the Commission to understand better the companies that are using the foreign private issuer accommodations today and determine if changes are needed to better protect U.S. investors," Atkins said.































The call for comment issued Wednesday invites public discussion of possible regulatory changes. These could include a requirement that companies qualifying as foreign issuers are also listed on major foreign exchanges in jurisdictions with robust regulatory oversight.































The SEC would issue a formal proposal before adopting any final rule.































"We should not unwittingly allow our markets to be part of an international regulatory loophole at the expense of U.S. investors and U.S. businesses," said Caroline Crenshaw, the lone Democrat on the SEC. (Reporting by Douglas Gillison in Washington; Additional reporting by Mei Mei Chu in Beijing; Editing by Nia Williams and Tom Hogue)