BEIJING - A record number of companies got the boot from Chinese mainland stock exchanges last year and that number could double in 2023, as regulators ramp up efforts to cull poorly performing firms and those that violate the rules or break the law.
A company can be expelled from mainland stock exchanges based on certain parameters, which are grouped into four indicators — financial performance, share performance, compliance and violations of law. Yet, last year’s delisting ratio of less than 1 per cent lagged in comparison with that of US exchanges, where according to a March 2021 report by Ping An Securities, it was around 4 per cent in 2020.
In terms of share performance, if a firm’s stock closes below 1 yuan a share for 20 consecutive trading days or if its market value remains below 300 million yuan for 20 consecutive trading days, it will be delisted. For example, bad-debt manager GI Technologies Group — whose stock is under “special treatment” status, a label given to firms in financial distress or facing regulatory problems — has logged losses for three consecutive years and is nearing the delisting threshold based on its finances.
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