Home » Strictly implement the delisting system and consolidate the normalized delisting mechanism

Strictly implement the delisting system and consolidate the normalized delisting mechanism

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In 2023, the first delisted listed company will surface. On the evening of January 13, *ST Kaile announced that the company’s net assets are expected to be negative at the end of 2022. According to relevant regulations, the company will hit the financial delisting indicator and the stock will be terminated from listing. At the same time, *ST Kaile may also be subject to forced delisting for major violations. *ST Kaile received the “Administrative Penalty and Market Prohibition Notice” (hereinafter referred to as the “Notification”) from the China Securities Regulatory Commission in December 2022, which has already touched the risk warning of major illegal delisting. In addition, the company’s stock price has been below 1 yuan for 11 consecutive trading days, which may touch the trading delisting index.

Entering the annual report disclosure season, a new round of “elimination” of A-share listed companies kicked off. Since the release of the new delisting regulations in 2020, a benign market ecology of “in and out, survival of the fittest” is accelerating. In 2022, the number of A-share forced delisting companies will reach 42, a record high, of which 39 have hit the financial delisting indicators, accounting for more than 90%.

In order to strictly implement the delisting system and consolidate the normalized delisting mechanism, on January 13, the Shanghai and Shenzhen Stock Exchanges respectively issued the “Notice on Strengthening the Information Disclosure of 2022 Annual Reports of Companies at Risk of Delisting” (hereinafter referred to as the “Notice”), At the same time, the relevant announcement format will be revised, and the delisting supervision work will be deployed in 2023. Listed companies that have been subject to financial delisting risk warnings (hereinafter referred to as “delisting risk companies”) are required to increase the frequency and pertinence of risk warnings before the annual report is disclosed. , including key reminders based on different situations, disclosure of annual report preparation and audit progress as required, etc.

*ST Kaile may touch triple delisting risk

On the evening of January 13, *ST Kaile issued a pre-loss announcement for 2022. The company expects a loss of 2.154 billion yuan to 2.322 billion yuan in net assets at the end of 2022, and a loss of 1.815 billion yuan in net assets at the end of 2021. At the same time, the company expects that the net profit attributable to shareholders of listed companies in 2022 will be -338 million to -507 million yuan. According to relevant regulations, if the company’s net assets are negative for two consecutive years, the company will touch the financial delisting indicator situation, and the company’s shares will be terminated from listing.

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In addition to touching the financial delisting indicators, *ST Kaile also involved in the forced delisting of major violations. On December 3, 2022, *ST Kaile announced that it had received the “Notification” from the China Securities Regulatory Commission. According to the “Notification”, there are false records in *ST Kaile’s regular reports from 2016 to 2020. After calculation, the company’s net profit attributable to the parent from 2017 to 2020 is negative. If according to the conclusion of the formal administrative penalty decision, the company is involved in a major violation of the law and forced delisting, the stock will be terminated from listing.

According to the “Notification”, due to the “private network communication case”, *ST Kaile’s total falsely increased operating income reached 51.225 billion yuan from 2016 to 2020, and the proportion of falsely increased revenue to the disclosed operating income of the year was 48.99% and 73.31%, respectively. %, 86.32%, 85.85% and 91.13%; the total inflated profits totaled 5.936 billion yuan, and the proportions of inflated profits to the total disclosed profits for the year were 64.97%, 99.99%, 144.84%, 183.71% and 247.45% respectively. In addition, *ST Kaile has inflated operating costs by 44.352 billion yuan and research and development expenses by 937 million yuan in total over the past five years.

In addition, the stock price of *ST Kaile also continued to be lower than 1 yuan per share, or it may touch the mandatory delisting of transactions. As of January 13, the stock price of *ST Kaile has been lower than 1 yuan for 11 consecutive trading days. According to relevant regulations, if the company’s stock price is lower than 1 yuan for 20 consecutive trading days, the company’s stock will be directly terminated from listing. At present, the Shanghai Stock Exchange has focused on monitoring the hype of *ST Kaile in the market.

Exchange strengthens delisting risk disclosure

One of the key points of the “Notice” is to insist on information disclosure as the core and strengthen the disclosure of delisting risks. The delisting of listed companies has a significant and extensive impact and will have a profound impact on investors. However, under the existing rules, the disclosure frequency of individual companies’ risk warning announcements is low, the content of the announcements is relatively general, lacks pertinence and timeliness, and fails to effectively remind the existing delisting risks.

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In this context, the “Notice” moderately increases the frequency of disclosure of delisting risk disclosure, requiring delisting risk companies to disclose a risk warning announcement every 10 trading days after the first risk warning announcement is disclosed and before the annual report is disclosed. Investors reminded relevant companies of the risk of delisting, and simultaneously revised the announcement format to enhance conciseness and readability.

At the same time, in order to strengthen the effect of risk disclosure and make it easier for investors to understand, the “Notice” clarified for the first time that if a delisting risk company is involved in 7 types of situations with high risk of delisting, it should give a key reminder, mainly including performance forecast related indicators that touch the delisting standard , Accounting firm has not been hired, there is a major difference between the accounting firm’s judgment on whether the company is delisted and the company, matters affecting whether the company is delisted have not been verified and the obligation of information disclosure has not been fulfilled, the company’s estimated delisting risk and previous disclosure major changes occur.

Delisting risk The company’s annual report preparation progress and the type of audit opinion directly affect whether the delisting index is met. In order to prevent the “sudden death” of delisting risk companies, the “Notice” clearly states that delisting risk companies should disclose the preparation of the annual report and the latest audit progress 20 trading days and 10 trading days before the scheduled disclosure date of the annual report, and explain the major accounting treatments. , Key audit matters, types of audit opinions, and the timing of the issuance of audit reports, etc., whether there are major differences with the accounting firm. If the accounting firm has a major disagreement with the company on the aforementioned matters, it may report to the stock exchange and issue a special explanatory document at the same time, explaining the specific disagreement and the latest audit progress.

Refine the due diligence requirements of relevant responsible entities

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The “Notice” also reminds delisting risk companies to focus on four major categories of matters. The recognition and deduction of operating income, the recognition of non-recurring gains and losses, the types of audit opinions, and the accounting treatment of shell transactions or capital operations are key areas and important areas involved in delisting. link. The “Notice” requires delisting risk companies to conduct key verifications around the above four types of matters. First, on the basis of the authenticity and accuracy of revenue recognition, deduction and disclosure of operating income shall be carried out in strict accordance with the rules; second, in light of the company’s own actual business conditions and degree of association, non-recurring profit and loss items shall be accurately identified in accordance with regulations; third, a high degree of attention shall be paid to The progress of the matters involved in the previous non-standard audit opinion in the current period, it is forbidden to “purchase” audit opinions through surprise changes of accounting firms at the end of the year to avoid delisting; Fourth, prudently handle shell transactions and capital operations, and conduct accounting in accordance with regulations It is not allowed to avoid delisting by means of falsely increasing income, illegally confirming income, etc.

In addition, whether the directors, supervisors, and senior managers of delisting risk companies can perform their duties diligently, and whether the accounting firm can make prudent and independent judgments will directly affect the quality of information disclosure in the annual report of listed companies and the effect of delisting risk disclosure. The “Notice” specifies the due diligence requirements of relevant responsible entities, and clarifies that directors, supervisors, and senior managers of delisting risk companies should attach great importance to the preparation and disclosure of annual reports, obtain sufficient and comprehensive decision-making basis information, and reasonably use the right to object.

Disclaimer: The Securities Times strives for truthful and accurate information, and the content mentioned in the article is for reference only and does not constitute substantive investment advice, so operate at your own risk

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