Overview

For Chinese companies involved in US exchange listings and reverse mergers, the last few months have seen a major increase in serious investigations stemming from alleged violations of US securities law and listing requirements. Managing and devoting resources to respond to these proceedings can significantly impact the company's financial resources, with costs potentially reaching tens of millions of US dollars, as well as day-to-day operations and employee morale.

The costs of compliance and responding to US proceedings coupled with low share price and trading volumes have made US capital markets less attractive for many Chinese companies, causing some to reconsider their status as a US listed company. Various exit alternatives exist, however as this briefing explains, the legal and practical costs of delisting can also be significant.

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