Twenty Suspended Firms Face Permanent Delisting in Hong Kong

Of the 22 firms that were already suspended last August when new rules took effect, only two have so far been given the green light for their shares to resume trading. 

Twenty companies face possible expulsion from Hong Kong’s stock exchange if they miss a deadline on Wednesday (31 July) to convince regulators to allow trading in their shares to resume, reports the SCMP.

Under new rules which took effect last August, companies whose shares were suspended for at least one year will be permanently expelled from the exchange if they fail to address the issues that led to the suspensions and apply to resume trading within one year. Newly suspended companies have a additional six months to address their own issues. Previously, no time limit was set out in the regulations, leaving many stocks to remain suspended for years on end.

Of the 22 firms that were already suspended last August, only two have so far been given the green light for their shares to resume trading. These include Dynasty Fine Wines Group, which resumed trading on Monday (28 July) after a six year suspension, and wireless solutions provider Coolpad Group, which was suspended for two years before trading resumed.

The remaining 20 companies – which have a combined market capitalisation of HKD90.24 billion – must submit proposals to HKEX (Hong Kong Exchanges and Clearing) on how they plan to turn their businesses around, and present evidence of steps they have already taken.

According to the SCMP, thirteen of these firms have also fallen foul of the SFC (Securities and Futures Commission), and will additionally need the regulator’s approval to resume trading.

Many of the companies had their trading suspended because of issues with related to their financial statements, cash shortages, or other management issues. To resume trading, they must demonstrate these issues have been addresses.

 

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