Image source: Visual China
The U.S. Securities and Exchange Commission (SEC) added Weibo Corporation to its "pre-delisted list" on Wednesday (March 23), making it the sixth company on its list.
This means that Weibo is at risk of being delisted. Weibo needs to provide evidence to the SEC by April 13 that it is not eligible for delisting. If it cannot be proved, it will be included in the "confirmed delisting list".
Weibo also became the first Chinese Internet company to be "named" after BeiGene, Yum China, Zaiding Pharmaceutical, Shengmei Semiconductor, and Huang Pharmaceutical were included in the SEC's "pre-delisting list" on March 8.
According to the "Provisional list of issuers identified under the HFCAA*, image source: SEC.com
For the news, Weibo said to the Titanium Media APP that there was no response.
As of the close of trading on March 23, EST, The U.S. stock market Weibo stock price fell 0.59%, quoted at $27 per share, with a total market capitalization of $6.387 billion. As of press time, The Weibo of the Hong Kong stock market rose slightly by 0.48%, with a price of HK$211.4 per share and a total market value of HK$49.593 billion.
Under SEC regulations, companies that are on the "Definitive Delisting List" are required to submit the documents required to the SEC within three years. If the companies on the "Confirmed Delisting List" do not submit documents, or if the documents submitted do not meet SEC requirements, they will be required to be delisted immediately after disclosing their 2023 annual reports (early 2024).
The Foreign Corporations Accountability Act (HFCAA) became law on December 8, 2020. On December 2, 2021, the SEC formally passed amendments to finalize the rules for implementing the filing and disclosure requirements of the Foreign Corporations Accountability Act (HFCAA).
The rule applies to registrants identified by the SEC as having submitted annual reports issued by certified public accountants located in foreign jurisdictions where the Public Company Accounting Oversight Board (PCAOB) cannot inspect or investigate (issuers identified by the Commission).
The HFCAA requires U.S.-listed foreign companies to file with the SEC to prove that the company is not owned or controlled by a foreign government, and requires these businesses to comply with the audit standards of the U.S. Public Company Accountants Oversight Board (PCAOB). The amendment also requires foreign issuers to provide certain additional disclosures to themselves and any of their combined foreign operating entities in their annual reports.
In response to the changing regulatory environment, Chinese companies listed in the United States have begun to list on the Hong Kong Stock Exchange. The latest company to announce the plan is Tencent Music Group (TME).
On Tuesday (March 22), TME Chairman Peng Jiaxin announced that it would be listed on the main board of the Stock Exchange of Hong Kong Limited in the form of an introduction under regulatory approval, becoming the latest company to announce this plan.This, he said, was "to provide shareholders with greater liquidity and more protection in an ever-changing regulatory environment."
Weibo, which launched plans for a secondary listing on the Hong Kong Stock Exchange in November last year, expects Class A common stocks to begin trading on the main board of the Hong Kong Stock Exchange on 8 December 2021.
The Hong Kong Stock Exchange has become the first choice for most technology companies to go public for a secondary listing, but this does not mean that they have sailed into the regulatory safety zone. In the prospectus materials, Weibo also disclosed to investors policy and regulatory risks involving cybersecurity, antitrust and competition, algorithm recommendation and other fields.
It is worth noting that with the continuous change of the situation, on March 16, the Financial Commission of the State Council held a special meeting, and the Party Committee of the CSRC quickly held an expanded meeting to convey the spirit of the study meeting and conduct research and deployment on the implementation of the meeting.The CSRC continues to strengthen communication with US regulators and strives to reach an agreement on Sino-US audit regulatory cooperation as soon as possible. We should pay close attention to promoting the implementation of new regulations on the supervision of overseas listing of enterprises, support all kinds of qualified enterprises to list overseas, and maintain smooth overseas listing channels。
In response to the fact that the first five companies were included in the "pre-delisting list", the CSRC also issued a response, saying, "We respect the supervision of relevant accounting firms by overseas regulators to improve the quality of financial information of listed companies, but we resolutely oppose the erroneous practice of some forces to politicize securities supervision." ”
The CSRC stressed, "We have always adhered to the spirit of openness and cooperation, and are willing to solve the problem of inspection and investigation of relevant firms by US regulatory authorities through regulatory cooperation, which is also in line with international practice." ”
(Author| Li Chengcheng)