Exchange tightens rules on delisting
The Stock Exchange is to introduce procedures to delist long-suspended companies which have failed to produce a trading resumption proposal in 18 months.
Listing rules now require all listed companies to have sufficient business operations but certain ones have stopped operating due to financial difficulties or debt problems and their shares have been suspended.
'The continuation of a suspension for a prolonged period without the issuer taking adequate action to obtain restoration of listing may lead to the exchange cancelling the listing,' the rules state.
Twelve companies have been suspended for more than three months and two, run by Provisional Legislator Chim Pui-chung, for more than 10 years.
The exchange yesterday announced four stages of delisting procedures which would apply immediately and would be added into the listing rules in the form of a practice note.
For the first six months after suspension, the exchange will request the suspended firm to make periodic announcements to shareholders.
The second stage permits a further six months to submit resumption proposals, and directors will need to give monthly progress reports to the exchange.
To proceed to the third stage, the exchange would publish an announcement naming the company, indicating it did not have sufficient assets or operations to be listed and would impose a deadline of six months for the submission of resumption proposals.
At the end of the third stage, if no resumption proposal is submitted to the exchange, the listing will be cancelled.
Mr Chim said the new rule would give companies a reasonable amount of time to seek a trading resumption. His companies had submitted proposals but they were not approved.
He hoped the exchange would allow those companies to restructure.