On the evening of July 4, 2018, Jiangsu Yabaite Technology Co. Ltd (stock code: 002323, hereinafter referred to as Yabaite 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 illegal information disclosure and non-disclosure of important information so that CSRC has recently transferred the case to the public security organ. Accordingly, SZSE has officially launched the forced delisting mechanism for Yabaite 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 Yabaite?
A: On April 6, 2017, CSRC initiated an investigation into the company’s suspected illegal activities such as illegal information disclosure. According to the CSRC Inspection Bureau’s Letter of Reporting Yabaite’s Transfer to the Public Security Organ According to the Law for Suspected Crimes, it has verified that Yabaite inflated its operating revenue and profit of 2015. 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 Yabaite are alleged to constitute the crime of illegal information disclosure and non-disclosure of important information. 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 the Rules Governing Share Listing on SZSE (hereinafter referred to as the Share Listing Rules), SZSE has formally launched the mandatory delisting mechanism for Yabaite and the company’s shares face the risks of listing suspension and delisting.
2. What phases may the company experience after the company is forced into the delisting procedure?
A: Yabaite was transferred to the public security organ by CSRC for alleged illegal information disclosure and non-disclosure of important information 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 shares resume trading on July 6, 2018, its stock trading is imposed with a delisting risk warning, and its daily price limit is 5%. The company’s stock 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) Yabaite does not meet the conditions for listing resumption within the same period, or (iii) Yabaite 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. During the delisting transitional period, the daily price limit of the company’s stock price is 10%;
(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.
In addition, during the company’s stock trading with a delisting risk warning, or after its stock listing being suspended or terminated, if the public security organ decides not to file a case or cancel the case against the company, or if the People’s Procuratorate decides not to prosecute, or if the court convicts it not guilty or exempts it from criminal punishments, and CSRC is unable to make a law-based administrative punishment decision against the company on the grounds of fraudulent stock issuance or serious illegal information disclosure the company may apply to withdraw the delisting warning for its stock, resume listing, or resume normal trading according to relevant regulations specified in chapters 13 and 14 of the Share Listing Rules.
3. After the company has been forced to withdraw from the market, do the company shareholders still have trading opportunities?
A: There are two trading opportunities for shareholders during the suspension and listing periods:
(1) According to Article 13.2.5 of the Share Listing Rules, the company shall immediately apply to SZSE for suspension of trading when it is informed that the CSRC has made an administrative penalty decision or the decision of transferring it to the public security organ. After receiving the above decision documents, the company should announce that its stock will continue to be suspended for one more trading day following the announcement. Since the date of trading resumption, SZSE will implement a delisting risk warning on the company’s shares. The daily up and down limit of the stock’s price is reduced to 5%. SZSE will suspend the trading of the company’s stock on the next trading day following the expiration of the 30 trading days after trading resumption, and decide whether to suspend its stock listing within fifteen trading days after suspension. Therefore, the stock of Yabaite Technology resumes trading on July 6, 2018 and will be traded for 30 trading days.
(2) According to the provisions of Article 14.4.33 of the Share Listing Rules, if SZSE decides to delist a company's stock in the case specified in Article 14.4.1 of the Share Listing Rules, the company enters the delisting transitional period on the next trading day following the expiration of the five trading days. The delisting transitional period is 30 trading days. During the period, the daily up and down limit of the stock’s price is 10%. Therefore, the stock of Yabaite can be traded for 30 trading days after the company entering the delisting transitional period.
4. Can the company’s stock be re-listed after it is delisted?
A: According to Articles 14.5.1 and 14.5.2 of the Share Listing Rules, a listed company may apply to the SZSE for re-listing if it meets the re-listing conditions stipulated by the SZSE after its stock is terminated. The compan’s re-listing sponsor should verify the re-listing conditions one by one and gives a clear opinion that the company is eligible for relisting application on the conditions that the impact of the company’s major information disclosure violations has been basically eliminated and the risks controlled.
5. What did Yabaite disclose for the risk of delisting?
A: On December 15, 2017, Yabaite made the announcement of Jiangsu Yabate Technology Co., Ltd. on receiving the “Administrative Punishment Decision” from the CSRC. “Jiangsu Yabate Technology Co., Ltd. Risk Warning Announcement” was first released on January 5, 2018. Thereafter, the company has issued a risk warning announcement every five trading days to continuously remind investors of relevant risks.
6. What is the next step of the SZSE on the delisting of Yabate?
A: As Yabaite is suspected of the crime of illegal information disclosure and concealing important information, it was transferred to the public security organ by CSRC. SZSE has officially launched the mandatory delisting mechanism for Yabaite and its stock is under the risk of being suspended and terminated. Next, SZSE will urge the company to continuously perform well in information disclosure in strict accordance with the Share Listing Rules and strengthen the warning of delisting risk. SZSE will make a decision on whether to suspend Yabate’s share in a timely manner and properly perform the delisting work according to laws and regulations. SZSE will pertinently do the risk warning during the transaction period. Yabate’s stock resumes trading on July 6, 2018. Within the following 30 trading days, the stock abbreviation will be changed to “*ST Yabaite”, and its daily up and down limit of price will be reduced to 5%. SZSE cares much about the analysis and research of public view on the company and the real-time monitoring of stock trading and keeps offering investor consultation to urge all parties to fulfill their obligations and effectively protect the legitimate rights and interests of investors.
