On 21 February 2024, the Listing Review Committee (the “LRC”) of the Stock Exchange of Hong Kong Limited (the “HKEX”) overturned the GEM Listing Committee’s (the “LC”) decision to suspend share trading (the “Suspension Decision”) of Baiying Holdings Group (“Baiying”, GEM stock code: 8525.HK) under GEM Rule 9.04(3) on the ground of non-compliance with GEM Rule 17.26.
Llinks Hong Kong office, as the Hong Kong legal advisor to Baiying, represented Baiying in the review proceedings. Llinks Hong Kong provided tremendous support in the preparation of materials and attendance at the hearings and assisted Baiying in successfully obtaining LRC's ruling in overturning the previous Suspension Decision.
Baiying was listed on GEM of the Stock Exchange of Hong Kong Limited (“GEM”) on 18 July 2018. The current principal business segments of Baiying include (i) financial services business; (ii) manufacture and sales of vinegar and other condiment products in the PRC; and (iii) packaging and paper products trading business. On 7 July 2023, the Listing Division (the “LD”) of HKEX decided that Baiying had failed to comply with GEM Rule 17.26 for not having sufficient operations, due to (i) the financial service business was maintained at a minimal scale of operation with decreasing revenue and profits over recent years; (ii) paper business was trivial; and (iii) the vinegar business had a short operating history and its scale of operation was minimal. Baiying made a request to review the decision, and upon holding a hearing in September 2023, LC decided to uphold the LD’s decision in October 2023, on the ground that Baiying failed to demonstrate a concrete and credible business plan to meet the forecasted operation scale in terms of revenue, so to prove that its businesses are sustainable, viable and of substance within the meaning of GEM Rule 17.26. Baiying further applied to LRC to review the decision in November 2023, and the LRC’s review hearing was held on 26 January 2024.
Upon taking into account the submissions from both Baiying and the LD, as well as considering the figures of the three main businesses of Baiying for the full year of 2023, LRC noted Baiying’s efforts in prudently and diligently navigating through difficult times, and that the deterioration in performance of the financial service business of Baiying had largely due to the change in regulatory environment rather than Baiying’s own fault. Baiying has shown to be prudent and diligent in keeping the operations of its financial service business in a stable, viable and sustainable manner by adopting a conservative strategy in achieving profitability through cost control instead of taking additional risks for revenue growth for its financial service business. Further, LRC also accepted that Baiying’s vinegar business had been set up with production capacity and distribution channels, and acknowledged that it required time for a new business to generate revenue and become profitable. In addition, LRC accepted that there was a sign of revenue breakthrough for the vinegar business at the end of 2023 and such momentum was carried over into 2024. On balance, LRC found Baiying had demonstrated that its businesses were of substance, sustainable and viable and complied with GEM Rule 17.26 at the time of the review hearing, and the Suspension Decision was overturned.
From 2021 to 2023, LRC had considered 60 review applications concerning the compliance with LR13.24/GEM LR17.26 on sufficiency of operation. Out of these 60 review applications, LRC had only overturned 2 decisions made by LC for GEM issuers and 5 decisions concerning main board issuers.
Llinks Team:Dennis Fong & Bosco Leung
Llinks Hong Kong office, as the Hong Kong legal advisor to Baiying, represented Baiying in the review proceedings. Llinks Hong Kong provided tremendous support in the preparation of materials and attendance at the hearings and assisted Baiying in successfully obtaining LRC's ruling in overturning the previous Suspension Decision.
Baiying was listed on GEM of the Stock Exchange of Hong Kong Limited (“GEM”) on 18 July 2018. The current principal business segments of Baiying include (i) financial services business; (ii) manufacture and sales of vinegar and other condiment products in the PRC; and (iii) packaging and paper products trading business. On 7 July 2023, the Listing Division (the “LD”) of HKEX decided that Baiying had failed to comply with GEM Rule 17.26 for not having sufficient operations, due to (i) the financial service business was maintained at a minimal scale of operation with decreasing revenue and profits over recent years; (ii) paper business was trivial; and (iii) the vinegar business had a short operating history and its scale of operation was minimal. Baiying made a request to review the decision, and upon holding a hearing in September 2023, LC decided to uphold the LD’s decision in October 2023, on the ground that Baiying failed to demonstrate a concrete and credible business plan to meet the forecasted operation scale in terms of revenue, so to prove that its businesses are sustainable, viable and of substance within the meaning of GEM Rule 17.26. Baiying further applied to LRC to review the decision in November 2023, and the LRC’s review hearing was held on 26 January 2024.
Upon taking into account the submissions from both Baiying and the LD, as well as considering the figures of the three main businesses of Baiying for the full year of 2023, LRC noted Baiying’s efforts in prudently and diligently navigating through difficult times, and that the deterioration in performance of the financial service business of Baiying had largely due to the change in regulatory environment rather than Baiying’s own fault. Baiying has shown to be prudent and diligent in keeping the operations of its financial service business in a stable, viable and sustainable manner by adopting a conservative strategy in achieving profitability through cost control instead of taking additional risks for revenue growth for its financial service business. Further, LRC also accepted that Baiying’s vinegar business had been set up with production capacity and distribution channels, and acknowledged that it required time for a new business to generate revenue and become profitable. In addition, LRC accepted that there was a sign of revenue breakthrough for the vinegar business at the end of 2023 and such momentum was carried over into 2024. On balance, LRC found Baiying had demonstrated that its businesses were of substance, sustainable and viable and complied with GEM Rule 17.26 at the time of the review hearing, and the Suspension Decision was overturned.
From 2021 to 2023, LRC had considered 60 review applications concerning the compliance with LR13.24/GEM LR17.26 on sufficiency of operation. Out of these 60 review applications, LRC had only overturned 2 decisions made by LC for GEM issuers and 5 decisions concerning main board issuers.
Llinks Team:Dennis Fong & Bosco Leung
