Investors suffer from delayed notification of HK delisting
By Ted Chen, The China PostTAIPEI, Taiwan -- A mainland company was fined by the Chinese government on Feb. 6 and was temporarily delisted on the Hong Kong exchange, but announcement of the news in Taiwan was delayed, to the severe detriment of investors holding the company's Taiwan Depository Receipt (TDR).
February 8, 2013, 12:01 am TWN
The company, Digital China (神州數碼), was fined by China's Ministry of Finance for submitting falsified materials when it applied to be a supplier of equipment in the Chinese government's smart city procurement program.
The company was fined 3,918 yuan, a sum equivalent to 0.50 percent of the winning bid. Consequently, Digital China's conduct will be placed on record, and the company will be banned from participating in government tenders for the next three years, according to Chinese authorities.
News of this event was released in Hong Kong at 12:58 p.m. on Feb. 6, but was not released in Taiwan until 2 p.m., the same day the Taiwanese market is to be closed for the duration of the Chinese New Year's holidays.
On the issue of the delayed news release in Taiwan, Digital China denied any wrongdoing and violation of Taiwan's financial regulations, claiming that as Hong Kong is their primary location of listing, they were obliged to announce the news in Hong Kong first.
Incidentally the company's spokesperson for the Taiwan market had resigned last Friday.
The company also indicated that government procurement represents only a small portion of total revenues. For the period spanning from April to December last year, government procurement accounted for less than 0.4 percent of revenues.
In response to accusations of submission of falsified materials, the company indicated that they had merely backed out of its bid, due to the sudden reneging of collaborative commitment by its partners, which rendered Digital China unable to provide the stipulation of its procurement contract with the Chinese government.
Shares of Digital China resumed trading yesterday in Hong Kong, and had recovered its 13 percent drop on the previous trading session, closing up 7.5 percent at HK$11.51. While in Taiwan, TDR of Digital China last closed at NT$21.95 on February 6, after falling the maximum allowable 7 percent intraday decline.