White Collar | Opinion: Strict delisting mechanism vital for success of planned Third Board
Shenzhen and Shanghai stock exchanges both expel companies that post three years of losses in a row. The new Third Board in Hong Kong should be just as tough
As the stock exchange prepares to consult the market over the next two weeks over the launch of a new Third Board to attract more technology and overseas companies to list, be ready for a lot of heated debate over which companies should be allowed onto the new list.
But actually, if we really want to make the new market is successful, it is probably more important to talk about tightening conditions on companies which really should be delisted from Hong Kong’s other indexes.
A lack of a delisting requirements has led to the problem of many so-called “cheat stocks” on the main Hang Seng board and the Growth Enterprise Market (GEM)– something we should avoid at all costs, with the proposed Third Board.
Hong Kong’s main board has tough entry requirement with only profitable companies that earn a combined HK$50 million (US$6.42 million) in three years leading allowed to list.
The GEM does not need companies to make a profit but they do need to have cash flow of HK$20 million.
Charles Li Xiaojia, the Hong Kong Exchanges and Clearing chief executive, last week said a consultation paper will be released by the end of this month to seek views on how to launch a third market to attract more technology firms to list here.
