Hong Kong stock market regulators appear to have halted planned listings by mainland China seafood firms due to awkward questions raised over paperwork relating to a previous, unsuccessful, listing.
The Securities and Futures Commission in Hong Kong has asked underwriter CCB International Holdings Ltd – a division of Construction Bank of China, one of China’s big four state owned banks – to further explain its records of sales made by Dongya Aquatic Products Co that in some instances appear to have been paid for by third parties. The records were compiled as part of a failed 2014 Dongya listings bid in Hong Kong.
Located in Dongyang on China’s southeast coast, Dongya is one of many Chinese seafood firms that have sought to raise capital through listings in recent years. Many have stayed on the mainland to list on a board for small- and medium-sized firms. Listing in Hong Kong is a much more complex, demanding process, but the liquidity pool in the city is far wider than those of the mainland markets, which retain significant restrictions on foreign investors or stock buyers.
The Dongya incident is a reminder of the often murky nature of Chinese business and the difficulties of doing quality due diligence in the sector, explained two corporate lawyers in Hong Kong spoken to by SeafoodSource. Both pointed to the gap between Chinese and international corporate governance standards.
The Dongya incident hasn’t been featured in Chinese mainland media over the past week.
