On March 30, the U.S. Securities and Exchange Commission (SEC) added Baidu, Futu Holdings, iQiyi, CASI(Beijing)Pharmaceuticals Technology Co., Ltd. and Nocera Inc. to a provisional list of companies that may be delisted from U.S. stock exchanges. This is also the third batch of China concepts stock to be put on its provisional list for potential future delisting.
Why it matters
The five companies must provide evidence to the SEC that they do not qualify for delisting by April 20 or risk being added to the “delisting list”. According to legal documents on the SEC’s official website, companies on the list need to provide the necessary documentation within three years. The countdown started from the disclosure of the first annual report, and 2021 is regarded as the first year. Relegated companies will face immediate delisting following the disclosure of their 2023 annual reports (early 2024).
Context
IQiyi stated that “this is a standard procedure for U.S. regulators to apply the Holding Foreign Companies Accountable Act (HFCAA). The provisional listing does not mean that the company’s American depositary shares will be delisted soon. We will actively explore solutions to protect stockholders’ interests.”
Chinese concept stocks have fallen under increasingly strict supervision due to China-US relations. Although the HFCAA does not specifically target Chinese corporations, many Chinese companies are likely to be delisted based on the law’s criteria.
