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15 November 2019

National Agricultural Holdings Limited – Decision of the Listing Review Committee
 
On 13 November 2019, the Listing Review Committee heard an application by National Agricultural Holdings Limited (the Company) for a review of the decision of the Listing Committee, set out in a letter dated 9 August 2019, cancelling the Company’s listing on the Main Board.
 
Having carefully considered all the facts and evidence, and all the submissions presented by the Company and the Listing Department, the Listing Review Committee decided that the Company’s listing should be cancelled under Rule 6.01A.
 
We set out below the Listing Review Committee’s reasons for its decision. Please note that this necessarily represents only a summary of the Listing Review Committee’s analysis, and does not purport to set out exhaustively the facts or address all of the arguments presented.
 
1. The Company’s business involved a financial leasing business in the PRC and the operation of a commodity trading platform for agricultural products and chemical fertilisers. It has been listed on the Main Board since December 1999, although trading in the Company’s shares has been suspended since 28 March 2017.
 
2. The trading suspension arose pending publication of the Company’s annual results for the year ended 31 December 2016. Deloitte Touche Tohmatsu, the Company’s auditor at the time, had raised questions relating to the existence of a certain bank account and balance of a subsidiary of the Company, and related underlying transactions. The Company appointed Ernst & Young (EY) to investigate these matters.
 
3. In June 2017, certain conditions were imposed on the Company that had to be met to the satisfaction of the Listing Department before the Company could resume trading. Amongst other things, these included requirements that the Company should:
 
  (a)    conduct a forensic investigation into the questions raised by Deloitte Touche Tohmatsu, disclose the findings, and take appropriate remedial actions; and
 
  (b) publish all outstanding financial results and address any audit qualifications.
 
4. On 4 July 2017, the Securities and Futures Commission directed a suspension under section 8(1) of the Securities and Futures (Stock Market Listing) Rules.
 
5. On 12 March 2018, the Company announced the key findings of EY’s forensic report. EY concluded, amongst other things, that they were unable to confirm the existence of the bank account.
 
6. In 2019, the Company made requests for more time with a view to a resumption of trading. These were declined by the Listing Department.
 
Applicable Listing Rules and guidance
 
7. The rules applicable to cancellation of listing were amended in 2018 and the current rules came into effect on 1 August 2018 (the Effective Date). Rule 6.01A(1) provides that "… the Exchange may cancel the listing of any securities that have been suspended from trading for a continuous period of 18 months."
 
8. Guidance Letter HKEX-GL95-18 (GL95-18) provides further guidance on long suspension and delisting. As noted in GL95-18, the objective of the amended delisting Rules is to keep the necessary trading suspension to the minimum, by facilitating timely delisting of issuers that no longer meet the continuing listing criteria. This, in turn, provides certainty to the market on the delisting process. The delisting Rules are also aimed at incentivizing suspended issuers to act promptly towards resumption and deterring issuers from committing material breaches of the Rules.
 
9. Various transitional provisions are set out in Rule 6.01A(2). In the case of the Company, the relevant transitional rule is Rule 6.01A(2)(b)(ii), which applies to issuers which are not subject to a decision to commence the procedures to cancel a listing and a notice period for delisting immediately before the Effective Date, and when trading in that issuer’s securities has been continuously suspended for 12 months or more as at the Effective Date. Under that rule, the 18 month period referred to in rule 6.01A(1) commences 6 months before the Effective Date.
 
10. The practical effect of the above rules is that the Company could be cancelled if it had not resumed trading by 31 July 2019.
 
11. Paragraph 12 of GL95-18 emphasises that, under the Rules, the Exchange would cancel the listing of a long suspended issuer upon the expiry of the remedial period (prescribed or specific) if the issuer has not remedied the issues causing the suspension and re-complied with the Rules.
 
12. Paragraph 19 of GL95-18 notes that the remedial period may only be extended in exceptional circumstances.
 
Listing Committee decision
 
13. In August 2019, the Listing Department recommended to the Listing Committee that the Company’s listing be cancelled on the basis that the Company had failed to fulfil all the resumption conditions and resume trading by 31 July 2019.
 
14. The matter was considered by the Listing Committee on 8 August 2019. The Listing Committee decided to cancel the Company’s listing under Rule 6.01A as the Company had failed to resume trading by 31 July 2019.
 
Developments following the Listing Committee decision
 
15. On 20 August 2019, the Company sought a review by the Listing Review Committee of the Listing Committee’s decision.
 
16. The Company did not provide any written submissions to the Listing Review Committee, but on two occasions in correspondence requested an adjournment of the hearing to a date after 31 December 2019. In support of these requests, the Company provided information regarding, amongst other things:
 
  (a) a potential investment and assistance in relation to resumption from a potential investor;
 
  (b) financial statements of two companies referred to by the Company as its subsidiaries, namely Qianlong Computers Company Limited and Sino-Agri Equipment Co., Ltd.; and
 
  (c) an intended investment and assistance in relation to resumption from a further potential investor.
 
17. On 12 November 2019, the Company confirmed that it would not attend the Listing Review Committee hearing.
 
18. At the hearing, the Listing Department submitted that the resumption conditions had not been satisfactorily addressed, and that the potential investments which the Company had described in correspondence would be insufficient to address all the resumption conditions, as such an investment would not in itself satisfactorily address the regulatory issues which had been raised.
 
Listing Review Committee’s views
 
19. Trading had not resumed trading by 31 July 2019 and accordingly the Company’s listing could be cancelled under Rule 6.01A.
 
20. There were no exceptional circumstances warranting an extension to the remedial period. Amongst other things, the information provided by the Company in support of its requests for the hearing to be adjourned was both general in nature and limited. Overall, there was no material evidence that the Company either had made, or had real prospects of making, substantive progress towards satisfaction of the resumption conditions.
 
Decision
 
21.    The Listing Review Committee therefore decided to decline the Company’s request for the hearing to be adjourned, and to uphold the Listing Committee’s decision that the Company’s listing should be cancelled under Rule 6.01A.
 
Please note that decisions of the Listing Review Committee do not represent binding precedents, and do not constrain the discretion of or otherwise bind the Exchange or other committees (including without limitation the Listing Review Committee in respect of other matters).