TMTPost -- Alibaba Group will soon change to a dual primary listing in Hong Kong, executives of the company signaled at an earnings call Thursday.
Credit：Alibaba
Alibaba is actively pursuing a primary listing in Hong Kong, said the Chief Financial Officer Toby Hong Xu. Xu told analysts that Alibaba is scheduled to hold a shareholder meeting on August 22 and the conversion process of the dual primary listing status would complete once the relevant proposal is approved by shareholders during the meeting. As to whether Alibaba shares would be added to Stock Connect scheme between Hong Kong and mainland China, it largely depends on different procedures that different exchanges adopt and the company will follow specific procedures, according to Xu.
Xu』s remark indicated Alibaba will achieve a goal to reduce shares risks related to China-U.S. tensions through a plan that it initiated two years ago.
Alibaba announced on July 26 2022 that it decided to seek the dual primary listing in Hong Kong, an attempt for allowing its shares continue to be traded even if it fails to avoid of being delisted from the U.S. stock market. Once the conversion completes, the company will become a dual primary listed on Hong Kong Stock Exchange (HKEX) and the New York Stock Exchange (NYSE), and the stock marker 「S」 will be removed from its stock short name on HKEX.
Alibaba then CEO Daniel Zhang said the decision to add Hong Kong as another primary listing venue was made to foster a wider and more diversified investor base to share in Alibaba』s growth and future, especially from China and other markets in Asia. Analysts commented Alibaba's dual primary listing will help it ease the potential pressure of delisting in the United States in the future. They expected the move will eventually broaden the investor base and increase the trading volume for the stock as the change should give mainland China investors easier access to the shares via a link to the HKEX known as the Stock Connect.
In late July 2022, days after Alibaba』s announcement of the plan to change its listing status, the U.S. Securities and Exchange Commission (SEC) has added Alibaba to a provisional list for failing to comply with the Holding Foreign Companies Accountable Act (HFCAA), which allows SEC to prohibit companies from trading and make listed companies be kicked out of U.S. exchanges if the Public Company Accounting Oversight Board (PCAOB), SEC』s accounting body, is unable to inspect or investigate these company audits for three consecutive years.
The HKEX in August 2022, issued its Primary Conversion Exchange Acknowledgement pursuant to Alibaba』s Change of Listing Status Guidance Letter on Monday, effectively approving the Chinese internet giant』s application for conversion of its secondary listing status in Hong Kong. The document said the convertion is expected to take effect by the end of 2022.
「We expect that the Primary Conversion will allow us to broaden our investor base and facilitate incremental liquidity, and in particular expand access to China- and other Asia-based investors,」 Alibaba said in a filing on August 8 2022.
However, more than three months later, Alibaba said that it had postponed its change of listing status to primary from secondary. 「We will not complete conversion to the primary conversion by the end of 2022 as planned, considering we still need to formulate and submit a new employee stock ownership program to shareholders in accordance with the new rules of the HKEX」, the company said in a filing with the exchange on November 17 2022.
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