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On May 24, 2018, the Listing Committee of Shenzhen Stock Exchange (SZSE) held its first hearing on the planned termination of the listing of shares of Ingenious Ene-Carbon New Materials Group Co., Ltd. (hereinafter referred to as “*ST Carbon” or “Company”), and listened to the parties’ arguments.
At the hearing, SZSE staff made statements on the proposed termination decision and the associated facts and rules. Audit reports suggested that the Company had a negative net profit for three consecutive fiscal years in 2014, 2015 and 2016, so shares of the Company have been suspended from listing since July 6, 2017. On April 28, ZhongXingHua Certified Public Accountants LLP issued an audit report providing a disclaimer of opinion about the financial report disclosed in the Company’s 2017 Annual Report. According to Article 14.4.1 of the Rules Governing Share Listing issued by SZSE, the listing of shares must be terminated forcibly if the listing is suspended due to net profit, net assets, operating income, or audit opinion causes and the first annual report following the suspension indicates that the company’s financial report is provided any of the modified opinions (that is, a qualified opinion, an adverse opinion, and a disclaimer of opinion) in the audit report, no matter whether the financial statements report profits or losses.
Parties to the hearing made statements about the company history, tasks carried out during the suspension period, changes to the company’s de facto controller, issues covered in the 2017 audit report with a disclaimer of opinion, and the company’s follow-up measures. They also stated that they well knew the explicit violation of Rules Governing Share Listing but still made a request for a grace period of rectification with the company’s actual situation considered. The committee members participating in the hearing made inquiries about the reasons of providing a disclaimer of opinion in the audit report, the reasons of the independent directors’ ABSTENTION on the Company’s 2017 Annual Report, and the applicable circumstances of listing termination as specified in Rules Governing Share Listing. SZSE staff and parties to the hearing made response. After the hearing, the Listing Committee held a meeting and concluded opinions about the hearing. Based on their opinions, SZSE will then decide whether to implement the termination.
It is the first hearing after SZSE released the newly revised Detailed Rules on the Hearing Procedures for Self-discipline on April 23 this year. It is also the first hearing held by SZSE on the review of forced listing termination. Through this hearing, SZSE staff clearly presents associated facts and rules to the parties to the hearing, who are also provided an opportunity to make statements and defenses, providing as many details as possible for the members of the Listing Committee. This helps streamline and standardize major regulatory decisions. This face-to-face hearing between SESE and the market entities further deepens the understanding of regulatory rules by market entities, effectively protects their rights to know, to participate, to express and to supervise, and plays an important role in enhancing the transparency and public credibility of frontline supervision.
Next, SZSE will stick to the discipline of law-based market governance, conscientiously carry out its front-line supervision duties, establish an open and fair supervision mechanism, and strive to establish a transparent stock exchange. All these will safeguard the development of a smooth and healthy multi-tiered capital market.
