ASX response Re: Delisted Chinese entities
ASX refers to your online report dated 23 July 2018 raising concerns about recently delisted China-based companies. You have observed that the information provided by these companies to the market has proven to be defective and asked what ASX did to validate the information provided by these entities.
ASX has a responsibility, as a licensed market operator, to monitor and enforce compliance with its listing rules. Where a listed company commits a breach of those rules, ASX has the power to suspend trading in its shares. If that does not lead to an appropriate outcome, ASX has the ultimate power to terminate the listing of the company. ASX does not take either of these steps lightly, since it takes away the ability of shareholders to trade their shares on a public market. However, when a listed company shows that it is not willing to comply with the listing rules, ASX has little choice but to terminate its listing to maintain the reputation of the market and to prevent it from attracting new investors.
It is true that ASX has terminated the listing of a small number of China-based listed companies over the previous year or so for breaching the listing rules. In each case, the termination has occurred after extensive engagement by ASX with the listed company in an attempt to have it rectify those breaches and usually after a lengthy period when its shares have been suspended from trading. ASX has in each case released a statement to the market explaining the reasons for the termination. Generally, in almost all cases, ASX has found that the company has committed a number of serious breaches of the listing rules, including on matters to do with the disclosure of information to the market.
ASX undertakes a number of checks before it admits a company to the official list, including criminal record and bankruptcy checks of its directors, and frequently rejects applications by companies it does not consider suitable. However, as I am sure you will appreciate, ASX is not in a position to guarantee the accuracy of the information a company provides to the market or the honesty or competence of it directors.
The law unequivocally makes it the responsibility of the company and its directors to ensure the information they provide to the market, both in their initial listing prospectus or subsequently under the listing rules, is accurate and not misleading.
You have mentioned that you have suffered loss from investing in China-based companies that ASX has de-listed and have asked what ASX is doing to recover those losses for investors. ASX sincerely regrets your loss but it is not in a position to take action for you to recover that loss.
ASX is a market operator and not a corporate regulator and does not have the power to take regulatory action against a listed company or its directors for breaching the law. In the case of a company established in Australia, the relevant corporate regulator with that power is the Australian Securities and Investments Commission (“ASIC”). In the case of a company established in another jurisdiction, it is the equivalent to ASIC in that jurisdiction.
ASX would encourage you to raise your concerns about the companies in question with ASIC. You can do so using the ASIC complaint service at: http://www.asic.gov.au/about-asic/contact-us/how-to-complain/report-misconduct-to-asic/
Yours sincerely
CDC Price at posting:
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