HKEx Wants To Speed Delisting Plans For Poorly Performing Companies

by Philip Morton, Investors Offshore.com

18 June 2002

Hong Kong Exchanges and Clearing (HKEx) Chief Executive, Kwong Ki-chi announced this week that the exchange plans to release a consultation paper suggesting ways in which the delisting process can be speeded for companies which consistently perform badly.

Speaking to the South China Morning Post, Mr Kwong revealed that the discussion paper, due for release in July, contains several suggestions designed to improve the quality of the exchange.

One proposal under consideration, according to the HKEx chief, is the automatic delisting of companies whose share prices remain at rock bottom for several years. Another is that the Hong Kong exchange should follow the Chinese model, and delist companies which suffer three years of consecutive losses.

Currently, although a company is obliged to prove that it has had three consecutive years of profit before it is allowed to list, organisations can only be delisted if they have no business operations and have been suspended from trading for two years.

'We want to speed up the process and to shorten the delisting process to about six months to a year,' Mr Kwong told the SCMP.

However, he reassured the jurisdiction's smaller operators that extensive public and industry consultation will take place before any changes are put in place.

'We could not set the threshold too high or a lot of smaller companies would automatically be delisted,' he explained.

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