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Huishan Dairy has been barred from trading by Hong Kong’s markets watchdog in a sign that the troubled dairy producer’s woes are deepening.
The company’s shares plunged 90 per cent in just 45 minutes late in March, at which point the company itself requested a trading halt. Monday’s suspension by the Securities and Futures Commission – a rare move by the regulator – means the company will have to satisfy a series of SFC requirements before dealing recommences.
While no timeframe was given, the SFC process can take years. Hanergy Thin Film Power, another spectacular crash stock, was suspended in July 2015 and is not yet trading again.
Following its price collapse, Huishan Dairy admitted to being behind on loan payments and one set of creditors has declared a default. Its independent board members then quit and subsequent resignations have reduced its board to two people – its founder, Yang Kai and its treasurer, Ge Kun.
Mr Yang’s shares almost certainly caused its dramatic price fall after a lender sold the shares he had pledged as loan collateral. Ms Ge disappeared a week before the share price crash and the company subsequently filed a missing persons report with the Hong Kong police.