Does Hong Kong’s proposed suspension rule give regulators enough teeth to eject errant firms?
- David Graham, HKEX’s head of listing, says the new suspension proposals are aimed at protecting investors
- Under the proposal a company’s shares can be suspended from trading if the auditor gives disclaimed or an adverse opinion on the financial statement
Dozens of companies could be delisted as soon as next year if a controversial proposal and other measures of the Hong Kong stock exchange are implemented, as it looks to improve corporate governance and market quality, but it faces serious opposition from market participants.
Hong Kong Exchanges and Clearing (HKEX) is collecting views from the marketon its proposal that could lead to a company being suspended from trading if the auditor gives an adverse opinion or if there are disclaimers on the financial statement starting from January 1. The consultation period, which started in late September, ends on Friday.
The new proposal comes after the HKEX introduced tougher rules in August that allows it to delist a company after a trading suspension of 18 months.
Ashley Alder, chief executive of the Securities and Futures Commission, said the new measures were aimed at protecting the interest of investors.
“We are working with the exchange on some key listing rule changes to tackle highly dilutive capital raising, proposals to catch back-door listings and fast track procedures for delisting,” Alder said in a speech at the Hong Kong Securities Institute on Tuesday.