Daqo Fears Delisting From US Stock Exchange

Chinese Polysilicon Producer Daqo New Energy May Be Delisted From NYSE By Early 2024

Daqo Fears Delisting From US Stock Exchange

A significant supplier of polysilicon to the global solar PV industry, including the US, Daqo New Energy appears on SEC list of companies that run the risk of being delisted from the US stock exchange. (Illustrative Photo; Photo Credit: Bjoern Wylezich/Shutterstock.com)

  • Daqo New Energy’s name has cropped up in a list of companies identified by the US SEC under HFCAA
  • It means the company could be delisted from the US stock exchange by early 2024 if the PCAOB is unable to inspect Daqo auditor’s working paper
  • Daqo said it is actively exploring possible solutions and will continue to comply with the laws and regulations of both China and the US

Polysilicon producer from China, Daqo New Energy is one of the companies picked by the US Securities and Exchange Commission (SEC) under the US Holding Foreign Companies Accountable Act (HFCAA), which may lead to it being delisted from the US stock exchange by early 2024.

The SEC list says Daqo has time till May 3, 2022 to submit evidence disputing its identification.

In a statement issued, Daqo said the delisting may occur if a company has been identified by the SEC for 3 consecutive years in case of the Public Company Accounting Oversight Board (PCAOB) being unable to inspect the auditor’s working paper related to such a company.

PCAOB is a nonprofit corporation of the US government to oversee the audits of public companies.

“The Company understands the SEC made such identification pursuant to the HFCAA and its implementation rules issued thereunder, and the identification indicates that the SEC determines that the Company used an auditor, whose working paper cannot be inspected or investigated completely by the PCAOB, to issue the audit opinion for its financial statements for the fiscal year ended December 31, 2021,” stated Daqo.

It could see its American depositary shares being delisted from the New York Stock Exchange (NYSE) in early 2024 ‘unless the Act is amended to exclude the company or the PCAOB is able to conduct a full inspection of the Company’s auditor during the required timeframe’.

The management added that it has been actively exploring possible solutions to best protect the interest of its stakeholders and will continue to comply with the laws and regulations of both China and the US.

In a note to investors, analysts from Roth Capital wrote on April 7 that they see, “DQ’s risk of de-listing may be low, in our view, as the company likely does not work with state secrets. Looking ahead, we could see the CSRC (China Securities Regulatory Commission) and PCAOB to come to a compromise potentially in H2’22.” Roth said, that “with respect to de-listing risk highlighted in DQ’s 20-F filed on 3/30, the main point of contention between Chinese regulators and the PCAOB is China’s unwillingness to expose sensitive information that it considers state secrets. We do not believe DQ works with state secrets.” Roth thinks, “there may be strong political will for a mutually agreeable settlement, with support by the State Council’s 3/16 Financial Stability and Development Committee (FSDC).”

Daqo was one of the Chinese companies blacklisted by the US government in 2021 for alleged links to forced labor of Uyghur population in Xinjiang where the company has a major of chunk of its polysilicon coming from (see US Government Ban On Xinjiang Produced Solar Products).

In December 2021, the US House of Representatives cleared the Uyghur Forced Labor Prevention Act to prevent goods manufactured or produced in Xinjiang from entering the US, unless the US Customs and Border Protection (CBP) can determine otherwise (see US Forced Labor Prevention Act).

About The Author

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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