Hong Kong-listed GCL-Poly Energy Holdings is one of a handful of Chinese companies that may lose access to debt capital markets because of weak corporate governance, according to a report issued by Fitch Ratings.
In its report Fitch assessed what it called the corporate governance and financial weaknesses of all 35 mainland companies whose debt it rates.
GCL-Poly Energy, a supplier to the solar industry, was one of five firms exhibiting four or more 'weaknesses'. The others were LDK Solar and medical equipment supplier China Medical Technologies - both listed on New York's Nasdaq market - and Toronto-listed logging firm Sino-Forest Holdings.
The Fitch report follows on the heels of a controversial report last week by the Moody's rating agency, which identified so-called 'red flags' at several mainland firms.
Fitch identified corporate governance 'weaknesses' as highly concentrated share ownership and independent directors having served long tenures. It identified high revenue and capital expenditure growth, suspiciously low tax rates and volatile profit margins as further risks.
Andrew Steel, the agency's head of Asia-Pacific corporate ratings, explained that high sales growth was risky because it was usually funded by heavy borrowing.
A raft of accounting scandals at mainland companies has made Chinese firms unpopular with foreign debt investors.
