The latest: Cloud-based services provider Cloopen Group Holding Ltd. (RAAS.US) said last Friday it was informed by the New York Stock Exchange (NYSE) on May 18 that it failed to file its annual report for the year ended Dec. 31 before the required deadline, putting it out of compliance with listing rules.
Looking up: The notification has no immediate effect on the company’s listing status, except that an “LF” indicator will be attached to its “RAAS” trading symbol to indicate its status as a late filer until it regains compliance with the listing criteria.
Take Note: If a company fails to file its annual report and extension application within six months of the deadline, the NYSE must decide whether to allow the stock to trade for an additional six months. If the NYSE determines that an additional six-month trading period is not appropriate, it can commence suspension and delisting procedures.
Digging Deeper: Cloopen’s delay is related to its recent involvement in an audit scandal detailed by the company earlier this month. KPMG, which was Cloopen’s auditor since 2018, announced its resignation last month after an audit of the company’s financial statements from last year uncovered falsified documents by some employees. The audit also uncovered irregularities in transactions with certain clients, which KPMG claimed were materially flawed. The company did not deny KPMG’s allegations, and said it had set up a special committee of three independent directors to launch an internal investigation into KPMG’s allegations.
Market Reaction: Cloopen’s shares sank 3.8% to $0.7011 in New York last Friday, near their all-time low since the company’s February 2021 IPO. The shares are now down 95.6% from their IPO price of $16.
Translation by Jony Ho
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