The Expert Expressly Stated That The "No Exemption Space" Applies For Exemption From Face Value Delisting. *ST Huayi Exclusive Response: "Application For Suspension Of Listing For One Year"

In November 20th, Zhong Xin, general manager of *ST Huaye, made a voice through the media. He said that *ST Huayi had submitted relevant materials for exemption from delisting to the exchange, and said it was the first case in the A share market.

According to the above report, Zhong Xin also said, "*ST Huaye triggers the denomination of the face value, to a large extent, it is related to the imperfect rules, the limited company, the investigation of confidential requirements, and the incorrect market information. The company applies for exemption from delisting, but does not want to leave any regrets. "

*ST China's application for exemption from the market has aroused heated debate.

In November 21st, the economic report reporters interviewed Zhong Xin in twenty-first Century. He denied the expression of "exemption from face value delisting", and told reporters that he did send a letter to the Shanghai Stock Exchange. The content is "application for *ST Huayi can suspend the listing for one year".

On the same day, a number of experts interviewed said that the denomination of face value is the choice of marketization and rule of law. It is necessary to stick to the case. Exemption from cases is not feasible under the current system.

Zhong Xin denies "exemption from face value delisting"

Prior to this, *ST Huaye for the 20 consecutive trading days from October 16, 2019 to November 12th, the daily closing price of shares was lower than the face value of stocks, triggering the denomination of the face value. At present, the company's stock has been suspended and the delisting audit procedure has been launched.

After combing with reporters, since last year, 7 companies in Shanghai and Shenzhen two cities have reached the index of face value delisting, of which 6 companies have been approved by the exchange for examination and termination of the listing. As of November 21st, in addition to the 7 companies that have already reached the face value of the delisting, Jin Asia technology and *ST Peng's stock have also been below $1.

From the point of view of management quality, the production, operation and financial situation of *ST eagles, *ST big control companies and so on are facing great difficulties.

However, Zhong Xin, in an interview with the economic news reporters in twenty-first Century, stressed that "*ST Huaye is unique."

"As *ST Huayi is involved in criminal cases, tens of billions of contractual fraud has been encountered. In the process of handling stolen goods, there are a lot of confidentiality requirements involved in the handling of cases, which leads to the fact that the company can not disclose the progress of the case before performing the relevant procedures, which makes investors unable to grasp the situation of the company in time, and the market information is not equal. Zhong Xin responded.

In November 13th, *ST Huaye issued a notice. In November 12th, the company received a letter from the Chongqing Municipal Public Security Bureau's economic crime investigation team. The police investigated and filed the company's accounts receivable fraud case in October 12, 2018. After investigation, the criminal suspects in this case are numerous, the funds involved are huge and the time span is 10 years, which is a national economic crime case. At present, the relevant criminal suspects have been taken corresponding criminal measures according to law, and the initial valuation of the frozen property has reached 3 billion yuan (part of the system is waiting for a freeze). In view of the fact that the case has not yet been prosecuted, the loss of assets will be recovered according to the court's outcome.

In response to the so-called "exemption from delisting", Zhong Xin told reporters that there are mainly two moves. "On the one hand, we are preparing for the hearing, hoping to get the result of a suspension of listing for a year. On the other hand, we sent a letter to the Shanghai Stock Exchange, which also applied for suspending the listing. The main reason for the defence is the particularity of the above criminal cases. "

*ST what is the texture of Huaye? The preliminary announcement shows that over 10 billion yuan of accounts receivable claims purchased by related companies from the affiliated enterprises could not be recovered on time, and the internal control operation was invalid. The internal control negative opinions were issued, the violation provided 1 billion 700 million yuan huge guarantee for the related parties, and the Commission was placed on file for investigation because of the violation of information disclosure. In the meantime, the exchange has issued regulatory inquiries to the company on many occasions.

"These situations show that the management team, controlling shareholder and internal control mechanism of the company almost all fall into the trap, which finally severely hurt the confidence of the market and investors. The 20 consecutive trading day is below the face value and is also the result of market selection. If we simply say that the company is a victim, it is hard to get market recognition. " In November 21st, a visiting investment bank said frankly.

No exemption from face value delisting

In fact, *ST Huayi has taken many self rescue measures when facing the risk of delisting and triggering the delisting conditions.

For example, in September 15th, *ST Huaye announcement, the actual controller Zhou Wenhuan and Tibet's long-standing commitment, injected the 50% equity interest of Chongqing Asia Pharmaceutical Co., Ltd. into the company, and the other 50% of the shares were received by the limited partnership platform jointly established by the company and financial creditors to support debt restructuring.

In November 7th, *ST Huayi announced another good thing: Jinbao mining company intends to acquire 5% of the listed company's shares through a partial offer.

However, the above self rescue failed to restore the stock price, and *ST China industry finally encountered investors' vote with feet. What has been questioned by the market is that although China's *ST industry has been doing well in the past, it has not been fulfilled in the end. Is this the way to pull up the share price?

Zhong Xin explained to reporters: "all announcements issued are based on authenticity. The acquisition of Jinbao mining company has already paid 16 million yuan deposit to the company, only because the company is facing a delisting. The company has also injected sufficient risks into the listed companies.

As for whether *ST Huayi can finally "exempt" from delisting, some experts have made it clear that under the current system framework, the delisting targets are objective and clear procedures, without leaving room for exemption.

A senior legal expert told reporters that the face value delisting is a commonly used delisting standard in the mainstream mature capital market, which is not only the phenomenon of stock value below par value, but also the threshold for maintaining the listing position of the company's stock in the open market. When a company's shares are below par value, investors vote with their feet and reflect value through price, which is the result of market screening.

A number of senior investment bankers also affirmed this view. It is true that the listed companies whose shares are below par value are generally stagnant, deteriorated in finance, and even have serious violations of law. The price below the face value is the result of investors' judgment of their value.

A lawyer familiar with the delisting operation at home and abroad told reporters that the face price delisting rule itself is not a punishment mechanism, but a market screening mechanism, which indicates that a specific market no longer recognizes the continuous listing status of the company's stock, but does not hinder the company's choice of stock in other markets. Take the US capital market as an example, the face value delisting rules have been in the New York Stock Exchange and Nasdaq market for a number of years, and the principles behind them are consistent, which have long been accepted by all parties in the market.

In the face of the interpretation of the experts, Zhong Xin frankly said: "there is no such case before. If the final conclusion of the Shanghai Stock Exchange is to terminate the listing, then it will fall back to the new three boards, and the debt restructuring of the company will continue to do so."