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=MARKET BUZZ: New HK Delisting Rules Seen Causing Auditor-Company Frictions

HONG KONG (Oct 11) -- Hong Kong stock exchange's new delisting framework, which took effect from Aug. 1, to result in automatic delisting of more than half of 75 companies that are currently on prolonged suspension of trading, says Barry Tong, a partner at accounting and consulting firm Grant Thornton. Under framework, bourse will cancel listing of any company whose shares haven't traded for 18 continuous months. Combined with proposed rules for trading suspension issued on Sep. 28, the regulations will cause more frictions between such companies and their auditors, as companies are likely to consider changing their auditor to avoid issuance of a disclaimer opinion by them, Tong says. Suspension rule requires listed companies to halt trading once auditor issues a disclaimer, effectively raising concern over financial statements of company. "The exchange is quite determined to get this rule passed," says Tong. Hanergy Thin Film Power, which suspended trading in May 2015 following a shortseller report and an order from SFC, and Sound Global, with shares suspended since April 2016 after SFC found it to have overstated bank balances, are among companies whose shares have been under suspension for a prolonged period.

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