In separate statements issued Friday, China Life Insurance, PetroChina, Sinopec, Aluminum Corporation of China and Sinopec Shanghai Petrochemical said they had notified the NYSE and applied for “voluntary delisting.”
All five companies cited “low turnover in the US” and “high administrative burden and costs” as their reason for the departure.
However, the news comes after all five were flagged by the US Securities and Exchange Commission in May, according to Reuters, for failing to meet US auditing standards.
China’s securities watchdog, the China Securities Regulatory Commission, said on Friday that it is aware of the situation and that “it is normal for companies to list or delist from any market.”
“We will keep in touch with foreign regulatory institutions and protect the rights of corporations and investors together,” it said.
Increasing scrutiny
The news comes as the Securities and Exchange Commission increases its scrutiny of Chinese companies’ audits.
Chinese companies that are traded overseas are required to hold their audit papers in mainland China, where they cannot be examined by foreign agencies.
Nevertheless, companies like Alibaba are taking steps to prepare for a potential loss of direct access to the US capital market.
Even before the commission added Alibaba to its watch list, the company announced it would seek a primary listing on the Hong Kong stock exchange.
Currently, Alibaba has a secondary listing on the Hong Kong stock exchange.
If the transition goes smoothly for Alibaba it could “set the path” for many more Chinese ADRs to pursue a similar switch, Citi analysts said.
