Lung Kee (Bermuda), a prominent mould maker headquartered in Hong Kong, has received conditional approval from the Singapore Exchange (SGX) for its proposed voluntary delisting from the SGX.
Announced by Lung Kee last Friday (22 Sept) marks an important strategic move for the company, which currently maintains a secondary listing on the mainboard of SGX alongside its primary listing on the Stock Exchange of Hong Kong (SEHK).
The rationale behind Lung Kee’s decision to pursue this voluntary delisting is rooted in several key considerations that are seen as being in the best interests of its shareholders.
Firstly, the company has observed that the trading volume of its shares on SGX has been consistently low, making it challenging to achieve the liquidity and market activity levels seen on the SEHK.
Lung Kee has reported that the trading volume of its shares on the SEHK significantly exceeds that on the SGX, making it a more viable platform for the company’s shares.
Secondly, the proposed delisting is expected to result in the elimination of additional administrative overhead and compliance costs associated with maintaining a secondary listing on SGX.
This move aligns with Lung Kee’s objective to streamline its compliance obligations, reduce legal and compliance expenses, and focus its valuable resources more efficiently on its core business operations.
Furthermore, Lung Kee’s historical experience with fundraising activities in Singapore has been minimal since its shares were originally listed on SGX in 1997.
The company’s board of directors believes that the primary listing on the SEHK is more than adequate to meet its future debt and equity fundraising requirements.
This confidence in SEHK’s capacity to support the company’s financial needs and future development forms an integral part of the motivation behind the proposed delisting from SGX.
Notably, the proposed delisting does not require a general meeting to obtain shareholders’ approval, and no exit alternative needs to be offered to shareholders in connection with the move.
The process has been set in motion with an application submitted to SGX, and the actual delisting is scheduled to take place on or around 5 Feb, 2024.
In response to Lung Kee’s application, SGX has indicated that it does not object to the proposed delisting, provided that certain conditions are met by the company.
These conditions include the prompt dissemination of an announcement regarding the proposed delisting via SGXNet, as well as the issuance of a notice to shareholders holding shares through the central depository (CDP) traded on the SGX-ST, at least three months prior to the delisting date.
Additionally, the notice to shareholders should transparently detail any actions required by them in relation to the proposed delisting, including any costs they may need to bear.
SGX emphasises that CDP depositors who do not take any action during the share transfer period will need to make their own arrangements for lodging their shares with SEHK’s central clearing and settlement system (CCASS) or a relevant broker if they wish to sell or trade their shares on the SEHK subsequently.
Lung Kee will not bear any charges that may be incurred in connection with the deposit of such shares into the CCASS.
Furthermore, the same notice must be addressed to banks that are approved by the Supplementary Retirement Scheme (SRS), and it must be sent to these approved banks at least three months before the delisting date.
It is important to note that SGX’s confirmation of having no objections to the proposed delisting should not be construed as an endorsement of the merits of the delisting.
Should the proposed delisting proceed as planned, Lung Kee shares will be delisted from the official list of the SGX and will henceforth be traded exclusively on the SEHK.
Importantly, the voting rights and entitlement to dividends of shareholders, including the CDP depositors, will remain unaffected by the proposed delisting, as affirmed by the company.
To ensure that all stakeholders are well-informed and prepared for this transition, Lung Kee intends to dispatch the notice to CDP depositors and SRS-approved banks on or around 23 Oct, 2023.
In the interim, the company has advised CDP depositors to exercise caution when dealing in their shares and refrain from any actions that could be detrimental to their interests.
Furthermore, Lung Kee has committed to issuing further announcements to shareholders as the process unfolds, including details of the timetable for the proposed delisting and instructions for actions to be taken by CDP depositors.
Shares of Lung Kee last traded at S$0.48 on the SGX on 4 Sep.
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