Seven listed companies on the A-share market in China announced on the evening of May 8th that they have been filed for not disclosing their 2023 annual reports on time. Among these companies are Dongxu Optoelectronics, Dongxu Blue Sky, Weichuang Technology, Puli Pharmaceuticals, ST Huatie, *ST Yuebo, and *ST Sansheng. Each company had different reasons for the delay in disclosing their reports.
Puli Pharmaceuticals cited incomplete self-inspection of past financial reports that may contain errors requiring correction. Weichuang Technology faced difficulties in obtaining audit approval for their annual report. ST Huatie encountered opposition from independent directors on the audit committee due to financial data issues. *ST Yuebo failed to pay audit fees, resulting in the resignation of the auditing institution.
Since May 6th, the stocks of these seven companies that failed to disclose their annual reports on time have been suspended from trading. *ST Sansheng and *ST Yuebo have been “locked” for compulsory delisting, while the remaining companies are at risk of being warned for delisting if they fail to disclose their 2023 annual reports within two months of the suspension.
According to Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, the failure of listed companies to disclose annual reports on time often indicates deficiencies in corporate governance structures, shortcomings in risk internal control measures, and lack of diligence and responsibility among senior management personnel.
Lu Dingliang, a partner at Beijing Jingshi Law Firm, stated that under listing rules, if a listed company fails to disclose annual reports within the statutory deadline, its shares will be suspended and face the risk of delisting. This failure can damage the company’s public image and market reputation, leading investors to question management capabilities, financial transparency, and potential financial issues. Shareholders and investors may also sue for losses due to the delayed disclosure, increasing the company’s legal risks and financial burdens.
Financial commentator Zhang Xuefeng believes that the failure to disclose annual reports on time and being investigated for disclosure violations could have serious repercussions for shareholders. Failure to disclose timely financial information may prevent investors from accurately assessing the company’s value and risks, potentially resulting in investment losses. Shareholders facing delisting risks should take timely measures to protect their investment interests and can seek recourse and compensation through legal channels against listed companies and regulatory authorities.
Data from the wind data service provider shows that as of the end of the third quarter of 2023, the shareholder base of these seven companies totaled approximately 496,000 households.
The announcements of these seven companies have sparked strong reactions from shareholders, with many expressing dissatisfaction. Tencent user 1jn72iw criticized the treatment of small shareholders in cases of listed companies violating regulations, questioning the fairness of punishments. Other users called for legislation to protect small shareholders and suggested holding companies and insiders accountable for compensating them for losses.
Online commentators also criticized the regulatory institutions for failing to fulfill their responsibilities. Some users called for accountability of previous leadership, audit committee members, company officials, and recommending institutions involved in the misconduct of listed companies.
The situation has raised concerns about the level of protection for shareholder interests and the need to activate the stock market for the benefit of all stakeholders. Debates persist on how to safeguard the interests of shareholders and the accountability of those involved in the listing process and regulatory oversight.