FAST NEWS: Daqo New Energy Says It May Be Forced to Delist in 2024

The latest: After being added to a growing list of companies facing possible forced delisting from U.S. stock exchanges, polysilicon maker Daqo New Energy Corp. (DQ.US) responded on Wednesday by saying it will continue to comply with applicable laws and regulations in both China and the U.S.

Looking up: The company said it is actively exploring possible solutions to best protect the interest of its stakeholders, without being more specific. One alternative could be a public listing in Hong Kong as some other U.S.-listed Chinese stocks have done, taking advantage of a friendlier regulatory and investment environment.

Take Note: The company has stated that its American depositary shares (ADSs) could be delisted from the New York Stock Exchange in early 2024 if the U.S. and China fail to reach an agreement on audit requirements, one of the first times a company on the list has given a specific potential delisting date.

Digging Deeper: The U.S. and China have been at odds over information sharing for New York-listed Chinese companies, and the conflict was exacerbated by the 2020 financial scandal involving massive fraud by Luckin Coffee (LNCKY.US). To gain access to audit records of U.S.-listed Chinese companies to prevent similar fraud, the U.S. passed the Holding Foreign Companies Accountable Act (HFCAA) in late 2020, giving China three years to reach an information-sharing agreement with the U.S. securities regulator. Such an agreement would give the U.S. Securities and Exchange Commission (SEC) access to audit records of nearly 300 Chinese companies listed in the U.S. that would otherwise face potential delisting. Some 23 companies have now been added to the SEC’s growing list, many of which, like Daqo, were added after filing their latest annual reports.

Market Reaction: Shares of Daqo surged 10.8% to $44.71 on Wednesday, ahead of where they traded before the SEC placed it on the list. They now trade in the lower- to middle-end of their 52-week range.

Translation by Jony Ho

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