China Rerun Chemical said a London stock exchange acted precipitously in suspending trading of its stock last week after the company was asked to commission an independent review of its finances.
Alternative Investment Market - a submarket of the London Stock Exchange that lets developing companies trade under a nominated adviser - suspended the Chinese lubricant company on Oct. 6.
According to an Oct. 6 filing by AIM, China Reruns nominated adviser, Cairn Financial Advisers LLP, asked the company to initiate an independent review of its financial management systems as part of AIMs ongoing assessment.
AIM said it suspended Rerun because the company did not wish to proceed with this review. As a result, London-based Cairn Financial and consultant Nick Lyth resigned immediately from their roles as Reruns nominated adviser and nonexecutive director, respectively. If Rerun fails to appoint a new adviser by Nov. 6, AIM will terminate its trading.
China Rerun refuted the suspension in an Oct. 9 statement. [Reruns board of directors] didn't reject this suggestion and never reject any system improvement as long as it is reasonable and necessary.
The Daqing-based company said that it received correspondence from Cairn on Thursday, Oct. 1, suggesting it appoint another independent reviewer by the following Monday (Oct. 5). The request came during Golden Week, Chinas national seven-day holiday which began Oct. 1. Rerun noted that Cairn requested a fee of 25,000 (U.S. $38,369) in association with the request.
Rerun said that before this month, it had not been contacted by Lyth or Cairn since its October 2013 listing on AIM. Rerun said it was aware AIM had sent an email to its nonexecutive directors on Sept. 11, mainly inquiring about its 2014 year-end results released in February.
Why were no qualified opinions and related party transactions disclosed? We consider this [Cairns] negligence rather than our problem, Rerun continued. We reserve the right to claim any damage to our business and reputation.