Zhihu, Ideal and other 17 companies were again included in the "pre-delisting" list by the SEC

Zhihu, Ideal and other 17 companies were again included in the "pre-delisting" list by the SEC , if the companies on the "determined delisting list" do not submit or the documents submitted do not meet SEC requirements, they will face immediate delisting after disclosing their 2023 annual report (early 2024). Seventeen companies including Zhihu and Ideal were again included in the "pre-delisting" list by the SEC. Zhihu, Ideal and other 17 companies were again included in the "pre-delisting" list by the SEC1

On April 21, local time, the U.S. Securities and Exchange Commission (SEC) again listed Li Auto, Best Group and Shell Other companies have been added to the "pre-delisting" list. This is the fifth batch of Chinese concept stock companies to be included in the list since March.

The specific list is: Zhihu, Novartis Furniture, LOVARRA, Wanchun Pharmaceutical, Luckin Coffee, Aurora, Scientific Energy, China Foods, Value Exchange International, Zerxixi Medical Group, Entrepreneur Universe Bright Group , China-Belgium Energy, China Grid Line, AMTD International, Best Group, Li Auto and Shell.

The SEC claimed that the deadline for the above-mentioned 17 companies to submit defenses is May 12, local time.

According to the "Foreign Company Accountability Law" previously announced by the SEC, companies that are included in the "Determined Delisting List" need to be included in the "Delisting List" (calculated from the disclosure of the first annual report, and 2021 is regarded as the first year) Submit documents required by the SEC within three years. If the companies on the "determined delisting list" fail to submit or submit documents that do not meet SEC requirements, they will theoretically face immediate delisting after disclosing their 2023 annual report (early 2024).

In addition, due to the deadline for defense, Futu Holdings, Nocera, iQiyi, Baidu and Kaixin Yuanda Pharmaceutical have entered the "confirmed delisting list" from the "pre-delisting list". These five companies are the third batch of Chinese concept stocks to be included in the list.

In December last year, the U.S. Securities and Exchange Commission (SEC) introduced new regulations requiring Chinese companies listed on U.S. stock exchanges to disclose their ownership structures and audit details, even if the information are from relevant foreign jurisdictions; the rule is considered a response to the Foreign Companies Accountability Act passed by the U.S. Congress in December 2020.

The Ministry of Foreign Affairs stated that the relevant measures of the United States are another concrete action to suppress the politics of Chinese enterprises, and are also another concrete manifestation of the U.S.'s suppression of China's development. We firmly oppose this. China has always believed that in today's highly globalized capital market, the right way to solve the problem is for relevant parties to openly and honestly strengthen dialogue and cooperation on issues such as strengthening cross-border regulatory cooperation and protecting the legitimate rights and interests of investors.

Politicizing securities regulation will harm others and ourselves. It will cause American investors to lose the opportunity to invest in many of the fastest-growing companies in the world, and it will also cause American professional service organizations to lose many business opportunities. The United States should recognize the situation clearly and provide a fair, just and non-discriminatory environment for foreign companies to invest and operate in the United States instead of erecting numerous obstacles. China will take necessary measures to safeguard its legitimate rights and interests.

At the special meeting of the Financial Stability and Development Committee of the State Council held in mid-March this year, the Financial Stability and Development Committee emphasized that regarding Chinese concept stocks, regulatory agencies from China and the United States currently maintain good communication. Positive progress has been made and efforts are being made to formulate specific cooperation plans. The Chinese government continues to support various companies in listing overseas. Seventeen companies including Zhihu and Ideal were once again included in the "pre-delisting" list by the SEC2

On Thursday, the U.S. Securities and Exchange Commission (SEC) once again added 17 Chinese concept stock companies to the "pre-delisting" list. This is the fifth batch of Chinese concept stocks to be included in the "pre-delisting" list since March.

The HFCAA said a company will be delisted from U.S. exchanges if the Public Company Accounting Oversight Board fails to properly audit it for three consecutive years. If companies on the "Delisting List" fail to submit or submit documents that do not meet SEC requirements, they will face immediate delisting after disclosing their 2023 annual report (early 2024).

The specific list of Chinese concept stocks newly added to the "pre-delisting" includes: Zhihu, Novartis Furniture, LOVARRA, Wanchun Pharmaceutical, Luckin Coffee, Aurora, Scientific Energy, China Food Holdings, Value Exchange International, Inc, Zerxixi Medical Group, Entrepreneur Universe Bright Group, China-Belgium Energy, China Network Carrier Line, AMTD International, Best Group, Li Auto, and Shell.

Previously, on March 8, the SEC included five companies, BeiGene, Yum China, Zai Lab, Ame Semiconductor, and Chi-Med, on the "pre-delisting list"; on March 23, " Weibo companies were added to the "Pre-Delisting List"; on March 31, five companies including Baidu, iQiyi, Futu Holdings, Kaixin Yuanda Pharmaceutical and Nocera were included in the list.

On April 12, Microvast (Microvast), China Automotive Systems, Daqo New Energy, Connect Biotech, Financial OneConnect, Greenprint Biotechnology, Legend Biotechnology, Sohu, Studio City, Melco Crown Entertainment, Logiq and Noah Holdings were also included in the "pre-delisting list".

It is understood that the "Foreign Company Accountability Act" currently promoted by the SEC mainly requires audit papers from foreign companies. However, most foreign companies originally subject audit papers to territorial jurisdiction. Zhihu, Li Auto and other 17 companies have been included in the "pre-delisting" list by the SEC3

According to the latest disclosure on the website of the U.S. Securities and Exchange Commission (SEC), Zhihu, Li Auto and other companies have joined the "pre-delisting" list List".

The specific list disclosed on the SEC website shows that Zhihu, Novartis Furniture, LOVARRA, Wanchun Medicine, Luckin Coffee, Aurora Mobile, Scientific Energy, China Foods, Value Exchange International, Zerxixi Medical Group, Entrepreneur Universe Bright Group, China-Belgium Energy, China Grid Line, AMTD International, Best Group, Li Auto and Shell are all included.

In this regard, Shell stated that the company has been actively seeking possible solutions to protect the interests of shareholders to the greatest extent. The company will continue to ensure compliance with relevant laws and regulations in China and the United States and, if conditions permit, maintain its status as a listed company on the New York Stock Exchange.

SEC website screenshot

The SEC stated that the deadline for the above 17 companies to submit their defenses is May 12, local time.

Previously, four batches of 23 companies in total have been included in the so-called "pre-delisting list." If the company cannot prove that it does not meet the conditions for delisting, it will be included in the "definite delisting list." In response, many companies responded urgently.

Futu Holdings issued a statement stating that it has been paying attention to the relevant requirements of the U.S. Foreign Companies Accountability Act (HFCAA) and assessing its potential impact on the company, and is actively exploring options to maintain the company’s listing status. The provisional list does not mean that the company's American depositary shares will be forced to be delisted and delisted in the near future.

iQiyi responded that this is a routine procedure for the US regulatory authorities to implement the previously announced "Foreign Company Accountability Act" and related implementation rules, and we have been paying close attention to this. Being on the provisional list does not mean that the company's American depositary shares will be forced to be delisted and delisted in the near future. We will actively seek solutions to protect the interests of shareholders.

Baidu announced that it has been actively seeking possible solutions and, if conditions permit, will remain listed on the Nasdaq Market and the Stock Exchange of Hong Kong Limited.

Sohu stated that it confirmed that the U.S. Securities and Exchange Commission (SEC) has included the company in the list of designations based on the "Foreign Company Accountability Act" and does not intend to challenge the SEC's provisional designation. . At the same time, Sohu said it is exploring options to delist ADS. Investors cannot be assured that delisting or alternatives, if any, will not have an adverse impact on the market value of ADSs. Other courses of action are being explored, but the actions the company may take have not yet been determined.

On the 18th, Sohu founder, chairman and CEO Zhang Chaoyang posted on WeChat Moments that Sohu did not want to delist.

On March 31, the China Securities Regulatory Commission responded to this matter and learned from the U.S. Securities and Exchange Commission that this is a normal procedure for U.S. regulatory authorities to implement the "Foreign Company Accountability Act" and is included in the list. Whether the company will actually delist in the next two years will ultimately depend on the progress and results of Sino-US audit supervision cooperation.