Alibaba moves closer to US delisting
Chinese company Alibaba is set to be delisted from US stock exchanges in response to Beijing’s refusal to let US inspectors review the company’s audits.
As Bloomberg reported on Friday (July 29), the Securities and Exchange Commission (SEC) has added the tech giant – the largest Chinese operation listed on US markets – to a growing list of companies at risk of withdrawal due to the audit status.
Bloomberg said publishing a company’s name begins a three-year countdown to permanent delisting. While many countries allow US audit inspections, China and Hong Kong have refused, arguing there are privacy and national security concerns.
As noted by PYMNTS, the dispute boils down to this: Regulators in the United States require certain companies to provide audit working papers before listing on US exchanges. Chinese regulators say some companies are blocking representatives of foreign entities from seeing certain information deemed sensitive.
Read more: Didi edges closer to delisting from NYSE
The report said a number of Chinese companies – including Alibaba – have started looking to Hong Kong for their main listings. The move could help those companies attract more companies from China, while providing a roadmap for other U.S.-listed companies if the audit dispute is not resolved.
The news comes two months after shareholders of Chinese app Didi Global voted to delist the company from the New York Stock Exchange (NYSE).
The vote was inspired at least in part by a review by the Chinese government of certain data handling procedures. A separate announcement said the delisting will help the company “better cooperate with cybersecurity review and rectification measures” and “the company’s shares will not be listed on any other stock exchange until the delisting is complete.”
See also: Chinese regulators hit Didi’s payment arm with major fine
But Didi previously said delisting was likely after it got caught up in the auditing standards battle between China and the United States following its initial public offering in 2021.
Earlier this month, Didi’s payments division was fined 4.27 million yuan ($632,170) by the People’s Bank of China.
The fines were related to violations involving traceability and authenticity requirements for transactions, opening accounts for financial companies and failure to promptly communicate material risk events. Didi reportedly worked with regulators to resolve the issue.