The US Securities and Exchange Commission on Thursday added Nasdaq-listed Weibo Corp, China's microblogging service provider, to its watch list of Chinese companies that are allegedly not in compliance with the Holding Foreign Companies Accountable Act.
An advertisement for Weibo.com, the Twitter-like microblogging service of Sina, is seen at Shanghai Hongqiao International Airport in Shanghai, China, 13 July 2013. [Photo / Image China]
Weibo has been given 15 business days to April 13 to produce evidence showing it should not be delisted from Nasdaq. Weibo did not respond directly to the delisting issue but said on Thursday that it would continue to monitor market developments and evaluate all strategic options.
Weibo is also listed on the Hong Kong stock exchange where it fell 3.53 percent on Friday, with the benchmark Hang Seng Index also down 2.41 percent.
Weibo's shares on Nasdaq slipped 0.59 percent to close at $27 on Thursday, though the intraday decline touched a depth of 7 percent, taking the company's market cap to $6.4 billion, way below the over $30 billion peak of early 2018.
Weibo is the sixth Chinese company facing possible delisting (in 2024), if it is unable to provide audit reports as required by the HFCAA.
On March 11, the SEC identified the first five US-listed Chinese companies－fast-food restaurant chain Yum China Holdings Inc, which operates KFC in China; ACM Research Inc, a semiconductor manufacturer; and three other biopharmaceutical companies－for failing to follow the HFCAA.
The five companies have been given 15 business days to March 29 to produce evidence showing they should not be delisted from the US exchanges.
Weibo debuted on Nasdaq in 2014. The company's 2021 financial report showed its sales revenue surged 34 percent year-on-year to $2.26 billion, with net profit up 37 percent year-on-year to $428 million. As of December 2021, Weibo had 573 million monthly active users, 52 million more than in 2020.
Passed in late 2020, the HFCAA mainly aims to prevent Chinese mainland companies from listing on US exchanges if they have not complied with audit requirements of the Public Company Accounting Oversight Board, the organization that oversees the audits of US-listed companies, for three consecutive years.
The China Securities Regulatory Commission, the country's top securities watchdog, said in a news release on March 11 that it is aware of the recent cases of US-listed Chinese companies facing certain challenges arising from the "normal process" of the SEC trying to implement the HFCAA and related standards.
The CSRC and the Ministry of Finance have been in touch with the PCAOB, and made positive progress.
The CSRC said it will accord due respect to overseas regulatory bodies trying to strengthen supervision over accounting practices for improving financial disclosures of public companies; but, at the same time, it strongly opposes any questionable adoption of securities regulatory activity tainted with political motives.
The PCAOB said in an earlier statement that it has continued to meet and engage with the Chinese authorities concerned to achieve a cooperative agreement that provides it with the access required to inspect and investigate completely auditors headquartered in the Chinese mainland and Hong Kong.
"Several important threshold issues" have been worked through, it said in the statement.