In this article, we summarize and advise on, in a few bullet points, HKSE’s consultation paper on new 13.50A rule – which would suspend trading on companies with weak internal control/fraudsters leading to auditor disclaimer or adverse of opinion.
Deadline to comment on proposal: November 30 2018 – link here
Full paper here (25 pages)
13.50A RULE– SOURCE: HKSE
“The Exchange will normally require suspension of trading in an issuer’s securities if it publishes a preliminary results announcement for a financial year as required under rules 13.49(1) and (2) and the auditor has issued, or has indicated that it will issue, a disclaimer of opinion or an adverse opinion on the issuer’s financial statements. The suspension will normally remain in force until the issuer has addressed the issues giving rise to the disclaimer or adverse opinion, provided comfort that a disclaimer or adverse opinion in respect of such issues would no longer be required, and disclosed sufficient information to enable investors to make an informed assessment of its financial positions.”
SUMMARY OF CONSULTATION PAPER
In our next article, we provide cautionary advice to the application of the proposed regulation.
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