The Hong Kong Stock Exchange has provided Mongolian coal producer SouthGobi Resources with a resumption guidance, compelling the company to conduct a forensic investigation of past conduct engaged in by former senior executive officers and employees of the company which raises suspicions of fraud, misappropriation of company assets and other criminal activities.
SouthGobi, which is listed on the TSX and the Hong Kong Stock Exchange, in December reported that it had received information relating to past conduct by former senior executive officers and employees who allegedly participated in suspicious transactions between 2016 and the first half of 2018.
The company had filed a report with police authorities in China and expanded the mandate of its special committee of independent nonexecutive directors, who had initially been tasked with investigating the November 2017 arrest of the company’s former CEO, to also conduct an internal investigation into the suspicious transactions.
Following the December announcement, the company’s shares were suspended from trading on the Hong Kong Stock Exchange.
As part of the exchange’s conditions for SouthGobi to resume trading, the company must, following the forensic investigation, disclose the findings of that investigation and take appropriate remedial actions, as well as inform the market of all material information for its shareholders and investors to appraise the company’s position.
Should SouthGobi fail to remedy the issues causing the trading suspension, fully comply with the listing rules to the Hong Kong Stock Exchange’s satisfaction and resume trading of its common shares on the Hong Kong Stock Exchange by June 16, 2020, the company’s listing on the stock exchange will be cancelled.