3 Chinese telecom carriers will be delisted from NYSE after losing appeals over a Trump-era investment rule

Staff members use their smartphones at a China Mobile display during the PT Expo in Beijing Oct. 14, 2020.

  • Shares of three Chinese telecom companies will be delisted from the New York Stock Exchange, The Wall Street Journal reported.
  • The appeals of China Mobile, China Unicom, and China Telecom against being delisted were rejected.
  • The ban was introduced during the tail end of the Trump administration.
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Shares of three major Chinese telecom carriers will be delisted from the New York Stock Exchange after their appeals against being delisted were rejected, based on separate filings in Hong Kong, The Wall Street Journal reported Friday.

China Mobile, China Unicom (Hong Kong), and China Telecom all said they expect the NYSE to request permission from the Securities and Exchange Commission to delist their American depositary receipts. This will take effect 10 days after the SEC is informed.

Former President Donald Trump on November 12, 2020, issued an order barring investments in publicly traded companies that the US government believes are owned or controlled by the Chinese military.

There had been a period of some back and forth, with the NYSE at one point reversing its decision before saying it would go ahead with the move to delist the shares. But when Joe Biden took office in January, the three companies asked the exchange to revisit its decision.

Trading of the American depositary receipts – securities that allow US investors to trade in foreign companies – of all three companies has been suspended since January 11.

But investors can still exchange those ADRs for shares by returning them to the Bank of New York Mellon, according to The Wall Street Journal.

The November order prompted index makers including FTSE Russell and MSCI to cut a dozen Chinese companies on the list from their benchmarks.

The Holding Foreign Companies Accountable Act, signed into law in December 2020, will require certain foreign companies identified by the SEC to disclose their shareholder information. This puts some Chinese companies at risk of being delisted as China in the past has been known to refuse the US Public Company Accounting Oversight Board to audit Chinese firms, often citing national security concerns.

The SEC in March said non-compliance for three consecutive years will get companies kicked off from the NYSE or Nasdaq.

Read the original article on Business Insider