Melco CEO Lawrence Ho reportedly exploring Hong Kong firm's relocation to Macau to avoid US delisting
Lawrence Ho Yau-lung, chairman and CEO of casino operator Melco Resorts & Entertainment, is reportedly seeking to relocate the firm's headquarters to Macau in order to avoid being delisted in the US. The US Securities and Exchange Commission previously stated that about 200 Chinese and Hong Kong corporations listed in New York would most likely be forced to delist in 2024 unless they adjusted to audit disclosure legal guidelines. However, Macau isn’t included in the delisting risk.
This would open the door to a potential loophole. "There are a few companies thinking this through right now, but the word is until the man upstairs opines, no one will make the move," unnamed people familiar with the matter stated in reference to Chinese President Xi Jinping, as reported by the Financial Times.
China has long prevented corporations and auditors from disclosing audit particulars to overseas regulators over nationwide safety issues. At the time, it remains unclear whether Beijing would allow overseas regulators to look at the audit information of corporations based in Macau.
After the introduction of the Holding Foreign Companies Accountable Act in 2020, regulators can prohibit overseas corporations from being traded within the US if the Public Company Accounting Oversight Board is unable to examine audits for 3 consecutive years. In line with this, in 2021, the PCAOB stated China and Hong Kong weren’t in compliance, giving corporations from these jurisdictions until 2024 to conform or be delisted within the US.
Macau-based corporations audited by accounting corporations outside China or Hong Kong might, in theory, proceed with trading as a result of the PCAOB having not found the region in breach of the rules, the Financial Times further reports, based on testimonies from a person close to the regulator.
To stay away from being delisted, Melco would have to change its auditor to one based within the US that is ready to be inspected by the PCAOB, people familiar with the matter told the cited source. Melco has been audited by the Hong Kong workplace of EY since 2017.
The group’s shares have lost more than half their worth in 2022 after being pummelled by the possibility of being delisted from Nasdaq and Beijing’s strict zero-Covid approach.
Negotiations between the US and China on entry to the audit information of Chinese groups listed within the US have reached a stalemate. In April, China modified a decade-long provision that restricted the data-sharing practices of abroad corporations in a concession to the US. However, it has not agreed to adjust to Washington’s demand for access to full audits.
Melco is one of six corporations licensed to handle casinos in Macau. Its properties include the City of Dreams resort and online casino in Macau, which incorporates the Morpheus Hotel designed by Zaha Hadid Architects. It raised $1.1 billion when it was listed on Nasdaq in 2006. Parent firm Melco International was listed in Hong Kong in 1927.
Source: https://www.yogonet.com/