On October 18, 2019, the Shanghai Stock Exchange (SSE) made a decision to terminate the listing of shares in *ST Dalian Dafu Enterprises Holdings Co., Ltd. (the “Company” for short) in strict accordance with the relevant provisions of the "Rules for Stock Listing" as well as the review opinions of the Listing Committee. The Company has become the first SSE-listed company forced to have the listing terminated because its share price was continuously below par. As a result of market selection, the termination of the shares in the Company reflects the orientation of the delisting system toward marketization, normalization and rule of law. The SSE will continue to stringently implement the delisting system, resolutely take the responsibility for delisting, effectively control the exit, foster the mechanism for the survival of the fittest, and consolidate the foundation for improving the quality of the listed companies.
The delisting of the shares in the Company is based on proved facts, clear rules and procedural compliance.
From August 22 to September 19, 2019, the daily closing prices of the shares in the Company were lower than the face value for 20 consecutive trading days, which triggered the circumstance of terminating the listing stipulated in Item 5 of Article 14.3.1 in the “Rules for Stock Listing”, resulting in the necessity of delisting. According to the provisions of Article 14.3.8 of the “Rules for Stock Listing”, the Company's stock had the trading suspended starting on September 20.
Then the SSE made the decision to terminate the listing of the Company in strict accordance with the relevant provisions of the "Rules for Stock Listing". On September 19, the SSE notified the Company that it had the right to defend itself and could apply for a hearing. On September 26, the Company submitted the application for a hearing, which was accepted by the SSE on the same day. On October 11, the SSE Listing Committee held a hearing meeting to fully listen to the Company's on-site statements and defense opinions. On the same day, the Listing Committee held a review meeting and made the review opinion to approve the termination of the listing of the Company. On October 18, in accordance with the review opinion of the Listing Committee, the SSE made the decision to terminate the listing of the Company. The termination of the listing of the Company has been based on proved facts, clear rules and procedural compliance.
The delisting of the Company’s stock is the result of market-oriented selection, with the risks fully revealed.
The share prices of the Company continuously staying lower than the face value truly reflected the Company's fundamentals, and the delisting of the Company’s stock was a result of the investors voting with their feet and market-oriented selection. In recent years, the Company has seen the internal control fail, the major shareholders’ long-term occupation of the listed company’s funds reach RMB1.746 billion, and the negative audit opinions on internal control issued for three consecutive years; the Company has suffered losses in business for three years in the past four years, with the losses amounting to RMB1.565 billion in 2018, and the non-standard audit opinions were issued in the financial audit reports for three consecutive years, namely, “disclaimer of opinion”, “qualified opinion” and “disclaimer of opinion”. In addition, the Company was also involved in multiple loan guarantee lawsuits and lawsuits of false securities statements to small and medium-sized investors, with major assets and bank accounts blocked and frozen. In July 2019, the SSE issued the penalties such as public censure to the Company, the Company’s actual controller and related responsible persons for the violations of the Company such as capital occupation and non-compliance guarantees. The China Securities Regulatory Commission (CSRC) launched an investigation into the suspected violations of the Company in information disclosure in May 2019.
In the process of delisting, with the regulatory urging, the Company fully warned about the risk of possible termination of listing due to the stock price being lower than the face value. On August 22, 2019, the Company's share price fell below the face value, and on August 23, the Company released a warning notice on major event to call attention to the risk of terminating the listing. On September 4, the closing prices of the Company's stock were lower than the face value for 10 consecutive trading days, and the Company disclosed the first announcement on risk alert of termination of listing on September 5. After that, the Company issued an announcement on risk alert every day. During the period when the Company's stock prices were continuously below par, the Company issued 11 risk-alert announcements, fully revealing the risk of listing termination in the market.
The investors should be rational in investing and cautious in trading during the delisting preparation period for the Company.
The Company's sixth special shareholders meeting in 2019 voted through the decision that the shares in the Company's would start the trading for the delisting preparation period after the decision on listing termination was made. According to the provisions of Article 14.3.20 of the “SSE Rules for Stock Listing”, the shares in the Company will enter the delisting preparation period starting on October 28, 2019, with the period lasting 30 trading days, and the ticker symbol will be changed to “Delisted Dafu Holdings”, with the daily price limits of the stock at 10%. The SSE will delist the Company's shares within 5 trading days after the expiration of the delisting preparation period. During the delisting preparation period, the Company shall not plan or implement any major asset reorganization.
The delisting preparation period is designed to provide the investors of the delisted companies with the last trading opportunities before the delisting of the companies’ stocks as well as release the risk. The investors should carefully read the relevant announcements issued by the companies and the “Detailed Rules of Shanghai Stock Exchange for Implementation of the Delisting Preparation Period Business”, pay close attention to the investment risks of the companies to be delisted, and conduct rational investment and cautious trading.
After the trading in the delisting preparation period, according to the provisions of Article 14.3.28 of the “Rules for Stock Listing”, the shares in the Company will be put on the National Equities Exchange and Quotations (NEEQ) for listing and transferring within 45 trading days from the date of delisting. The SSE will urge the Company to fully disclose the arrangements and contact information for the investors to handle the stock ownership confirmation, registration and custody, and the ways to obtain the company information, after the termination of the stock listing, so as to protect the rights and interest of the investors.