More than half of the current 75 prolonged suspended companies are expected to be delisted on July 31 next year, due to the amended rules of the Hong Kong stock exchange, according to Barry Tong, national head of transaction advisory services at accounting and consulting company, Grant Thornton.
The new rule allows the bourse -- a wholly owned subsidiary of Hong Kong Exchanges and Clearing Ltd (0388) -- to delist an issuer on the main board after a trading suspension of 18 continuous months -- in a bid to speed up the delisting procedure.
Tong pointed out that in general, it is difficult for those companies to address concerns and resume trading in such a short period.
The volume of the delisted firms is relatively small compared to the more than 2,000 companies listed in Hong Kong, and will not affect the stock market, he added.
Also, HKEx is consulting on an order of trading suspension after auditors issues a disclaimer or negative opinion. Tong said that reforming the framework shows the regulator's determination to build up the reputation of the Hong Kong stock market.
He believed the consultation on suspension is good for the market, as it clarifies the necessity for companies to address auditors' concerns and meet the regulator's standards. Meanwhile, it will impose pressure on auditors as some companies may choose to change auditors before auditors release a disclaimer.
