Dozens of companies suspend fundraising as investigation into audit firm Ruihua enters fourth week
- Forty-two companies have halted bond and share fundraising activities since investigation into Ruihua Certified Public Accountants began in early July
- Four companies seeking to IPO on the new tech board in Shanghai have also had to halt their listing plans
Dozens of mainland companies have suspended their fundraising plans or in some instances even halted their initial public offerings, as the economic fallout continues to mount in the four weeks since China’s second largest accounting auditor was placed under investigation.
A total of 42 listed firms have announced they have suspended their fundraising plans after the auditor Ruihua Certified Public Accountants was placed under investigation in early July, according to filings made to the Shanghai and Shenzhen stock exchanges as of Monday. Four other companies applying for listings on the new Star Market have also halted the process pending a review.
Jinhe Biotechnology Co and Liande Automatic Equipment Co said in stock filings in Shenzhen on Monday that they have received orders from the China Securities Regulatory Commission (CSRC) to suspend their convertible bonds issuance plans owing to the ongoing investigation of Ruihua.
Four other companies issued stock filings on Sunday night, saying they have been ordered by the CSRC to suspend their share placements in Shanghai and Shenzhen.
They are Hunan Baili Engineering Sci&Tech Co, Jiaao Enprotech Stock Co, and MLS Co, and Woer Heat-Shrinkable Material Co.
“Financial irregularities and corporate governance issues are a global, and not a specifically mainland China problem. However, these issues on the A share market are often quoted as horrific examples because of their size and also because of the fact that the A share market is no longer a domestic market,” said Andrew Lam, a director with BDO in Hong Kong.