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To Strictly Hold Delisted Parties Liable--SZSE Decides to Delist the Stocks of *ST Huaze and *ST Zhonghe

Date: 2019-05-20

On May 17, 2019, SZSE made the decision to delist the stocks of *ST Huaze and *ST Zhonghe as per Articles 14.4.1 and 14.4.2 of the Rules Governing Share Listing (Revised in November 2018) and the review opinion of the Listing Committee. Holding the two companies liable and making the delisting decision is a practical measure to implement the guiding principle of the Central Economic Work Conference, improve the quality of listed companies, guard the door of the capital market and push forward the market- and law-based reforms.

 

Fully Revealing Delisting Risks

SZSE implemented strict regulation on *ST Huaze and *St Zhonghe according to laws and regulations, timely imposed disciplinary action against the violations of the companies and urged them to disclose updates during the trading suspension, fully revealing possible delisting risks such as negative net profit, negative net asset, failure to disclose annual reports in time, or a disclaimer of opinion or an adverse opinion in the audit report following the suspension of the stocks. SZSE also enhanced collaboration with CSRC and local regulatory bureaus to effectively defuse the risks and protect the legitimate rights and interest of small and medium investors.

 

Strict Enforcement of Delisting

Pursuant to Article 14.4.1 of the Rules Governing Share Listing (Revised in November 2018), *ST Huaze and *ST Zhonghe shall be delisted for reasons that *ST Huaze failed to disclose the first annual report within the prescribed period following its suspension, and that *ST Zhonghe reported a net profit deficit and a net asset deficit in its annual report and that it was issued a disclaimer of audit opinion. Based on the opinion of the Listing Committee, SZSE made the objective decision to terminate the trading of the two companies in compliance with relevant procedural rules. The decision is objective and well-founded.

 

Guarding against the Risks during the Delisting Transitional Period

As per Article 14.4.23 of the Rules Governing Share Listing (Revised in November 2018), *ST Huaze and *ST Zhonghe shall enter on May 27, 2019 a delisting transitional period lasting 30 trading days, with their stock abbreviation changed to Delisting Huaze and Delisting Zhonghe and the stock price daily fluctuation capped at 10%. The delisting transitional period is a kind of trading arrangement to provide necessary trading opportunities to investors and defuse risks. Investors are suggested to be rational and careful in investing in and trading the stocks.

Holding the two companies liable and making the delisting decision is a practical measure to implement the guiding principle of the Central Economic Work Conference, improve the quality of listed companies, guard the door of the capital market and push forward the market- and law-based reforms.