.jpg)
Ingenious Ene-Carbon New Materials Group Co., Ltd. (hereinafter as “*ST Ene-Carbon” or “the Company”) reported negative audited net profit for three consecutive fiscal years of 2014, 2015, and 2016, therefore listing of the Company’s stocks has been suspended by SZSE since July 6, 2017. On April 28, 2018, the 2017 annual report of *ST Ene-Carbon revealed that, Zhongxinghua Certified Public Accountants LLP issued a disclaimer of opinion in the audit report on the company’s financial accounting report. According to Article 14.4.1 of SZSE’s Rules Governing Share Listing, *ST Ene-Carbon shall be delisted.
Pursuant to Article 14.4.2 of the Rules Governing Share Listing and the review opinions of the Listing Committee, on May 28, 2018, SZSE made the decision to delist the stocks of the Company, making *ST Ene-Carbon the first company that was compulsorily delisted by SZSE in 2018.
Rigid review process and fair implementation of rules
On May 15, 2018, *ST Ene-Carbon submitted a hearing application. On May 24, SZSE Listing Committee held a hearing on the delisting of *ST Ene-Carbon, and listened to the defense opinions of *ST Ene-Carbon. SZSE adheres to a more standardized and rigid reviewing process by explaining to the party concerned the facts, grounds and rules for delisting the stocks, and giving the party concerned the opportunity to fully express its opinions and make defenses. The market player’ understanding of the supervision rules of SZSE was further improved, and its rights to know, to participate, to express and to supervise have been effectively guaranteed, which helps market participants reach consensus and jointly ensure the sound and stable operation of the market.
Members of the SZSE Listing Committee participated in the hearings on spot and obtained more detailed and accurate evidence and relevant information through the hearing, which helps them better understand and implement the rules, as well as improves the scientific and standardized level of major regulatory decisions. The 2017 annual report disclosed after the listing suspension of *ST Ene-Carbon showed that the Company’s accounting reports were given a disclaimer of opinion by Zhongxinghua Certified Public Accountants LLP in the audit report. As per Article 14.4.1 of SZSE’s Rules Governing Share Listing, *ST Ene-Carbon shall be delisted, therefore SZSE made the decision of delisting *ST Ene-Carbon based on the review opinions of the Listing Committee. The decision is objective and based on clear facts and evidence.
Strengthened law-based supervision, and proper risk warnings
During the period from May 4, 2016 when the delisting risk warning was issued to the time when the final delisting decision was made, SZSE had been continuously urging the Company to fully disclose delisting risks to protect the legitimate rights and interests of small and medium investors.
First, SZSE has been strengthening the regulation of information disclosure of listed companies in accordance with laws and regulations. Since the Company was issued with the delisting risk warning and became a high-risk company, SZSE strengthened the supervision on its information disclosure and actively urged the Company to disclose information in a timely, truthful, accurate, complete, and fair way. Prior to the listing suspension of *ST Ene-Carbon, SZSE paid much attention to risky issues concerning confirmation of proceeds from sale of equities in the Company’s subsidiaries and the possible failure to disclose periodic reports by the Company, and had adopted a series of regulation measures in a timely way, issuing multiple regulatory letters and publicly questioning the compliance of relevant accounting treatment and quotation of the CPA’s individual professional opinions, and requiring the Company to fully disclose its major risks. At the same time, at the discovery of any risks and problems, SZSE promptly brought them to the attention of relevant departments or requested investigation therefrom
Second, SEZS has been continuously urging the Company to fully disclose delisting risks to protect the legitimate rights and interests of small and medium investors. After *ST Ene-Carbon’s listing was suspended, SZSE has been urging the company to disclose progress of the work conducted during the suspension and asking the company to fully disclose the delisting risks provided that the Company, during the suspension of listing, records a loss in its annual result, or fails to disclose the first annual report in the statutory period following the suspension, or receives a disclaimer of opinion or an adverse opinion on its financial reports. Moreover, SZSE has also issued regulatory letters for several times, requesting the Company to retain an auditor for its 2017 financial report as soon as possible and urging it to resolve the delisting risks.
Third, SZSE has taken timely regulatory measures and disciplinary actions against *ST Ene-Carbon regarding its violations. The company failed to disclose the 2016 annual report as of April 30, 2017. Furthermore, there was a major discrepancy between the 2016 business performance forecasted and that disclosed in the 2016 periodic reports and the Company failed to disclose the correction notice. For the above reasons, SZSE has made public censure and taken other disciplinary actions against the Company, relevant parties, and auditors in strict accordance with laws and regulations. After the listing suspension, SZSE had sent a letter of concern to the Company and the accounting firm regarding the 2017 performance forecast with a profit result disclosed by the Company, and urged the Company to truthfully and accurately disclose the annual performance after prudent review.
Delisted companies are highly risky, and investors should be careful about buying their stocks during the delisting preparation period.
SZSE issued a decision on May 28, 2018 to delist the stocks of *ST Ene-Carbon. According to Article 14.4.23 of the Rules Governing Share Listing, the Company’s stocks shall enter the delisting preparation period from May 6, 2018, with a trading period of 30 trading days, and its stock abbreviation shall be changed to “Ene-Carbon Delisting”, and daily stock price fluctuation shall be limited to 10%. SZSE will officially delist the stocks of the Company in the second trading day following the expiration of the delisting preparation period.
The delisting preparation period provides a necessary trading opportunity for investors of a delisted company, with the aim of releasing risks. Investors should read through the relevant notices issued by the Company and the Special Provisions of SZSE on the Business during the Delisting Preparation Period (Revised in 2015). Investors need to pay high attention to the investment risks in a company to be delisted and be careful about buying of their stocks.
Stocks of a company could still be transferred after being delisted, and the company need to perform the obligation of disclosing information.
According to relevant rules, a company’s stocks shall enter the National Equities Exchange and Quotations System for transfer during the 45 trading days following the expiration of the delisting preparation period. SZSE will urge the Company to fully disclose arrangements regarding investor equity confirmation, registration, and custodianship, the Company’s contact information, and accessed to company information after the Company is delisted, thereby guaranteeing the rights and interests of investors.
According to relevant provisions of the Interim Measures of the National Equities Exchange and Quotations System for the Transfer of Shares of STAQ and NET Companies and Delisted Companies, shareholders must re-perform equity confirmation, registration, and custodianship procedures in accordance with relevant regulations before the transferring their shares. For details about how investors shall re-perform equity confirmation, registration, and custodianship procedures, and how to transfer the shares of a delisted company in the National Equities Exchange and Quotations System, please check the website of www.neeq.com.cn.
After the stocks are delisted, *ST Ene-Carbon remains a company limited by shares and shall abide by relevant provisions of the Company Law and other laws, and continue to fulfill its obligations and social responsibilities, ensuring that the legitimate rights and interests of its shareholders intact despite the change to the company’s listing status.
With required conformance to the specified conditions for re-listing, SZSE will impose rigid review according to laws and regulations
After the termination of share listing, if a company satisfies the conditions for re-listing, it may submit a re-listing application to SZSE. Section 5 of Chapter 14 of SZSE’s Rules Governing Share Listing states the relevant principles and the SZSE Implementation Measures on the Re-listing of Delisted Companies (2015 Revision) specifies the specific arrangements. After receiving the application for re-listing, SZSE will strictly perform review duties in accordance with laws and regulations and, if necessary, require relevant agencies to investigate the truthfulness of the company’s profitability and related conditions.
An SZSE officer said that the delisting system for listed companies is important and fundamental to the capital market and significant for purifying market environment, optimizing resources allocation, promoting survival of the fittest and perfecting market mechanisms. Through the efforts and impetus of CSRC and with reference to the experience of mature markets, we’ve established, under the existing law framework, a diversified and market-oriented delisting indicator system and a stable listing implementation mechanism in the capital market while gradually achieved the “normal, legal and market-oriented” delisting. Meanwhile, market players feature greatly improved understanding of and agreement on the delisting system.
Next, SZSE will carry out the guiding principles of the 19th CPC National Congress and the National Financial Work Conference to a greater depth, practiced comprehensive and stringent law-based supervision and strictly put in place the liabilities of delisting subjects. On the one hand, SZSE will impose strict check on the execution of delisting. Once a company triggering the delisting conditions is found, it will confront the process of delisting. On the other hand, under the CSRC leadership, SZSE will further perfect the mandatory delisting implementation system in cases of major illegal behaviors, optimize the delisting indicator system for financial-type and market-type companies and amplify the force of risk warning against the high-risk enterprises that have suspected ability to continue as a going concern, major uncertain events or issues causing difficulties for investors to judge the corporate prospect. All these efforts are designed to constantly consolidate the institutional basis, prevent systematic financial risks and promote the long-term sound development of the SZSE multi-tiered capital market.
