Tianhe Chemicals Group is scheduled to appear before a Hong Kong Stock Exchange disciplinary board today to appeal its delisting after the company’s prolonged suspension for failing to meet exchange requirements.
The company, which is based in Jinzhou, was delisted from the Hong Kong exchange in January after five years of inactivity. The company appealed the delisting to the exchange’s Listing Review Committee, which is an advisory body. Tianhe can appeal an adverse decision by the review committee to the Listing Appeals Committee, the final appeals body, according to the exchange’s website.
Emails to the Hong Kong Exchange asking about a decision timeframe went unanswered.
Issues with Tianhe’s listing began not long after its 2014 initial public offering. The lubricant additives and specialty fluorochemicals producer has had its trading suspended since March 2015. Under rules implemented in August 2018, the exchange can delist companies if trading of their stock has been suspended for 12 consecutive months. Companies already under suspension when the rule was adopted received a grace period lasting until July 31, 2019.
Trading of Tianhe’s stock was suspended in 2015 for failure to file audited financial reports, a lapse stemming from an auditor’s refusal to sign off on its 2014 annual report. The auditor concluded that the company did not adequately answer questions of whether a few activities were properly accounted for and whether it had adequate internal controls to ensure compliance with the Hong Kong exchange’s rules.
The stock exchange later raised similar questions and said that Tianhe had to address them to before trading of its stock could resume. Tianhe has since said repeatedly that it was attempting to do so, but trading was never allowed to resume.
In March 2019, the Hong Kong Securities and Futures Commission penalized three investment banks for abrogating their responsibilities as sponsors of the 2014 IPO. The commission fined UBS HK$375 million (then U.S. $48 million), Morgan Stanley HK$224 million and Merrill Lynch HK$128 million. The commission also suspended UBSs license to sponsor IPOs for a year.
If Tianhe is eventually delisted, under Hong Kong Stock Exchange rules, it can restart the application process immediately, a spokesperson told Lube Report in October.