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Didi asks shareholders to approve delisting in New York to satisfy Beijing before going public on another exchange

  • The ride-hailing giant is urging shareholders to vote to delist from the New York Stock Exchange to help it wrap up its cybersecurity probe in China
  • Didi said delisting was necessary to complete its ‘rectification’ and list on another international stock exchange, which could be in Hong Kong

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A screen displays trading information for ride-hailing giant Didi Global on the floor of the New York Stock Exchange on December 3, 2021. Photo: Reuters
Coco Feng

Didi Global, the Chinese ride-hailing giant whose New York listing triggered cybersecurity investigations by Beijing last summer, urged shareholders to vote at a meeting later this month to delist from the New York Stock Exchange, saying it is necessary to satisfy Chinese authorities.

Didi said it “has concluded that it needs to complete the cybersecurity review and rectification in order to resume normal operations”, including restoring its 26 apps in Chinese app stores so that the company can restart new user registrations.

If Didi does not delist to complete the rectification process, it “would have a material adverse impact on the company’s ability to conduct normal operations”, it said in a filing by company chairman and CEO Will Cheng Wei to the US Securities and Exchange Commission (SEC) on Wednesday.

The statement offered the most detailed account from Didi of the Chinese cybersecurity review, which has been conducted over the last 10 months behind closed doors. Beijing’s probe into Didi, launched two days after its US$4.4 billion IPO in New York, has become a cautionary tale for overseas investors about China tech stocks. Didi closed at US$1.53 on Wednesday, nearly a tenth of its IPO price of US$14.
A joint government body led by the Cyberspace Administration of China (CAC), which also includes the Ministry of Public Security and the Ministry of State Security, started its on-site investigation of Didi last July, but the probe has yet to issue any conclusions.

Didi said it has to go through the cybersecurity review if it chooses to go public on “another internationally recognised exchange, including the Hong Kong stock exchange”. Following the probe of Didi, Beijing updated regulations to require a cybersecurity review of any company seeking an overseas IPO if it handles the data of more than 1 million Chinese users.

Didi said it has made several improvements in cybersecurity, including disclosing personal information collection to users and formulating an internal management mechanism in data security and storage. Didi set up a committee headed by its CEO to oversee the overhaul of its data management practices, the South China Morning Post reported in September.
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