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  Listing Council Decision 2021-02
Identification Number 1789

Filing Delinquency

Rule 5250(c)(1): A Company shall timely file all required periodic financial reports with the Commission through the EDGAR System or with the Other Regulatory Authority. A Company that does not file through the EDGAR System shall supply to Nasdaq two (2) copies of all reports required to be filed with the Other Regulatory Authority or email an electronic version of the report to Nasdaq at All required reports must be filed with Nasdaq on or before the date they are required to be filed with the Commission or Other Regulatory Authority. Annual reports filed with Nasdaq shall contain audited financial statements.

Rule 5820(d)(4): In the case of a Company that fails to file a periodic report (e.g., Form 10-K, 10-Q, 20-F, 40-F, or N-CSR), the Listing Council may grant an exception for a period not to exceed 360 days from the due date of the first such late periodic report. The Company can regain compliance with the requirement by filing that periodic report and any other delinquent reports with due dates falling before the end of the exception period. In determining whether to grant an exception, and the length of any such exception, the Listing Council will consider the Company's specific circumstances, including the likelihood that the filing can be made within the exception period, the Company's past compliance history, the reasons for the late filing, corporate events that may occur within the exception period, the Company's general financial status, and the Company's disclosures to the market. This review will be based on information provided by a variety of sources, which may include the Company, its audit committee, its outside auditors, the staff of the SEC and any other regulatory body.

Issue: At issue is whether a company regains compliance with the Listing Rules when it files its delinquent periodic financial report with the SEC, but the report filed is materially incomplete.

Determination: Affirm the decision to suspend and delist the Company.

The Listing Council agrees with the Hearings Panel, and with Staff, that the delinquent Form 20-F that the Company filed with the SEC was materially incomplete and thus inadequate to cause the Company to regain compliance with Listing Rule 5250(c)(1).  The audit work was incomplete as to subsidiaries which accounted for an overwhelming portion of the Company’s income and assets and which constitute the core of its business operations.  As such, the Form 20-F, as filed, provided little meaningful information to investors about the financial status of the Company.  The mere fact that the Company itself disclosed the limitations of the audit work in the Form did not suffice to cure the Form’s inadequacy.  If the Council was to decide otherwise, then it would effectively enable a listed company to cure any periodic filing deficiency by simply filing a perfunctory disclosure which states that required information will be produced at a later date.  Such a result would be clearly inconsistent with the purpose of Listing Rule 5250(c)(1), which is to ensure that listed companies provide timely and complete information about their financial conditions to investors. 

Insofar as the Company required additional time to complete its audit and to file an amendment to its Form 20-F to regain compliance with the Listing Rules, then the Listing Council had no choice but to affirm the Hearings Panel’s decision to delist the Company’s securities.  Listing Rule 5815(c)(1)(F) provides that the extent of the Hearings’ Panel’s discretion to grant a company an exception to Rule 5250(c) is 360 calendar days following the due date of a company’s first delinquent periodic report, and that a company may regain compliance with the Listing Rule only by filing its delinquent reports before the end of the exception period.  In this instance, the Company already received from the Panel the full 360 day exception period within which to regain compliance.  Pursuant to Listing Rule 5280(d)(4), the scope of the Listing Council’s discretion to grant an exception to the Company is co-extensive with that which was available to the Panel under Rule 5815(c)(1)(F).  As such, the Listing Council had no discretion to grant a further exception to the Company to regain compliance. 

Publication Date*: 4/21/2021 Mailto Link Identification Number: 1789
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