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On the evening of June 25, 2018, Geeya Technology Co., Ltd. (stock code: 300028, hereinafter referred to as Geeya or the company) released the “Announcement on the Company's transfer to public security bureau by the CSRC for suspected crimes”. The announcement says that the company is suspected of constituting the crime of fraudulent stock issuance and that CSRC has recently transferred the case to the public security organ. Accordingly, SZSE has officially launched the forced delisting mechanism for Geeya and the company's shares face the risks of listing suspension and delisting. Now, SZSE answers the thematic issues of concern to investors and reminds investors to pay attention to the stock trading risks.
1. What is the basis for SZSE to initiate the mandatory delisting mechanism for Geeya?
A: On August 22, 2016, CSRC initiated an investigation into the company’s suspected illegal activities such as fraudulent stock issuance. According to the CSRC Inspection Bureau's "Letter of Reporting Geeya's Transfer to the Public Security Organ According to the Law for Suspected Crimes", it has been verified that in ts IPO application materials Geeya inflated its operating revenues of 2008 and of January through to June 2009, which account for 47.49% and 68.97% respectively of the operating revenue disclosed in the corresponding period. Also, Geeya inflated its profits in 2008 and in January through to June 2009, accounting for 85.96% and 109.33% respectively of the disclosed profit in the corresponding period. According to the Criminal Law of the People's Republic of China, the Provisions of the Supreme People's Procuratorate and the Ministry of Public Security on Standards for the Prosecution of Criminal Cases Under the Jurisdiction of Public Security Organs (II) and related regulations, the above-mentioned actions of Geeya are alleged to constitute the crime of fraudulent stock issuance. According to the Regulations on Transfer of Suspected Criminal Cases by Administrative Law Enforcement Agencies and related regulations, CSRC has recently transferred the case to the public security organ. In accordance with he Rules Governing the Listing of Shares on the Chinext of Shenzhen Stock Exchange (hereinafter referred to as the ChiNext Listing Rules), SZSE has formally launched the mandatory delisting mechanism for Geeya. The company's shares have the risks of being suspended and terminated.
2. What phases may the company experience after the company is forced into delisting?
A: Geeya was transferred to the public security organ by CSRC for alleged fraudulent issuance and other crimes. Then, SZSE initiated a mandatory delisting mechanism for the company. Subsequently, the stages that the company's stock may undergo in chronological order include:
(1) The company's stocks resume trading on June 27, 2018 and will be traded for 30 trading days;
(2) SZSE makes a decision on whether to suspend the listing of the company's shares;
(3) After the company's stock is suspended from listing, SZSE will decide to terminate the listing of the company's shares if any one of the following three conditions is met: (i) the court makes a guilty verdict within 12 months from the date of the CSRC's decision to transfer, (ii) Geeya does not meet the conditions for listing resumption within the same period, or (iii) Geeya does meet the conditions for listing resumption but does not submit an application to SZSE within the time limit;
(4) The company's stock enters the 30-trading-day delisting transitional period;
(5) On the next trading day after the delisting transitional period, SZSE will delist the company's shares and the listing of the company's shares will be terminated.
3. After the company has been forced to withdraw from the market, do the company shareholders still have opportunities to trade its shares?
A: There are two trading opportunities for shareholders at the time of the company's listing suspension and delisting period:
(1) According to Article 13.1.8 of the ChiNext Listing Rules, the company shall apply for suspension of trading with SZSE immediately after being informed that CSRC has made a decision on administrative penalty or transfer to the public security organ. Upon receipt of the said decision, the company shall announce to the public that its stock trading will be suspended for one more trading day following the announcement. SZSE will suspend the trading of the company's stock on the trading day following the maturity of 30 trading days after trading resumption and decide whether to suspend the listing of the company's stock within 15 trading days after suspension. Therefore, Geeya's stock will resume trading from June 27, 2018 and be traded for 30 trading days.
(2) According to Article 13.4.23 of the ChiNext Listing Rules, if SZSE decides to delist a company's stock in the case specified in Article 13.4.1 of the ChiNext Listing Rules and the company does not apply for review, the company's stock enters the delisting transitional period from the next trading day following the maturity of 15 trading days after SZSE makes the delisting decision. If SZSE decides to delist a company's stock in the case specified in Article 13.4.1 of the Rules, the company applies for review, and the Appeal Review Committee upholds the delisting decision, the company's stock enters the delisting transitional period from the trading day right after the Appeal Review Committee's decision. The 30-trading-day delisting transitional period is open for trading, so after entering the delisting transitional period, Geeya's stock will be traded for 30 trading days.
4. Can the company's stock be relisted after delisting?
A: To regulate delisted companies' application for relisting and protect the legitimate rights and interests of investors, SZSE released the revised Implementation Measures of Shenzhen Stock Exchange for the Relisting of Delisted Companies (hereinafter referred to as the Relisting Measures) on January 30, 2015. Differentiated institutional arrangements for the Chinext Board are provided in the Relisting Measures. According to Article 2 of the Measures, the ChiNext Board of SZSE does not accept any application for relisting.
5. Has Geeya released adequate stock risk warnings?
A: Geeya released the first Risk Warning Announcement on Suspending the Listing of the Company's Stock on June 5, 2015, and thereafter has released a risk warning announcement every five trading days to warn investors of the risks.
6. What is SZSE's plan for the delisting of Geeya?
A: Geeya was suspected of fraudulent stock issuance and the case was transferred by CSRC to the public security organ. SZSE has launched the compulsory delisting program for Geeya, and the company's stock is exposed to the risk of listing suspension and delisting. Next, SZSE will urge the company to continuously carry out information disclosure and strengthen delisting risk warning in strict accordance with the ChiNext Listing Rules. SZSE will promptly make a decision on whether to suspend the listing of the company's stock, duly deal with the delisting of Geeya in accordance with laws and regulations, and issue specific risk warnings during the trading time. Within the 30 trading days after the company's stock resumes trading on June 27, 2018, SZSE will change the stock abbreviation to *Geeya temporarily. SZSE will continuously analyze the market sentiment for the company, monitor stock trading in real time, respond to questions from investors, urge all parties to fulfill obligations, and duly protect the legitimate rights and interests of investors.
